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SP 63 / Two volumes, $7.50 a set 




August 1949 


Originally Issued as 

With Special Reference to the Period 1944-1949 
Department of State Publication 3573 
Far Eastern Series 30 

Reissued with the Original Letter of Transmittal 
to President Truman from Secretary of State Dean Acheson 





College of Boca Raton 
Boca Raton, FL 33431 






August 1949 

Originally Issued as 


With Special Reference to the Period 1944-1949 

Department of State Publication 857 3 
Far Eastern Series 30 

Reissued with the Original Letter of Transmittal to President Truman 
from Secretary of State Dean Acheson 
and with a New Introduction by 

Stanford, California 

The China White Paper was originally issued by the United States Department of State 
in August 1949 under the title United States Relations with China , With Special Reference 
to the Period 19 44-19 49. The present edition is identical to the original except for the 
unnumbered front matter, ending with the Introduction by Lyman P. Van Slyke; the 
correction of some sixty typographical errors and minor discrepancies of orthography; 
and the addition of an Index. The Index was prepared for the present edition by 
Willard A. Heaps. 

Stanford University Press 
Stanford, California 

Introduction and Index © 1967 by the Board of Trustees 
of the Leland Stanford Junior University 
Printed in the United States of America 
Cloth ISBN 0-8047-0607-7 
Paper ISBN 0-8047-0608-5 
Last figure below indicates year of this printing: 

79 78 77 76 75 74 73 72 71 70 


by Lyman P. Van Slyke 

Until the Japanese attack on Pearl Harbor, American attitudes toward 
China were shaped by the missionary and the trader, who operated 
under the system of the unequal treaties forced on China by the Western 
powers. The United States benefited fully from such treaties— and 
even contributed to their final form by adding the concept of extra- 
territoriality — but because Americans had not taken the initiative in 
setting up and enforcing the treaty system, the American people felt 
little responsibility for its inequities. In time, Americans came to feel 
that their behavior in China contrasted favorably with the selfishness 
of the European powers and Japan, and this feeling was greatly height- 
ened by the idealism and moral fervor of the American missionary 
effort. The trader and the businessman— advocating free trade and 
opposing exclusive spheres of influence— represented America’s eco- 
nomic stake in China. But this was never more than a very small 
part of American overseas investment. 

In the end, therefore, there grew up a split between our attitudes and 
our actions. Having no great political or economic stake in China, we 
were inclined to frame our China policy in moral terms; but for the 
same reason, we were unwilling to back our policies, however just, 
against the conflicting policies of nations with higher stakes in the game. 
There was no conscious duplicity on our part. Our China policy re- 
flected our feelings as a nation; if we were reluctant to back these feel- 
ings, it was because our vital interests were not really involved in China. 

All this was symbolized by the Open Door policy. Originally an 
affirmation that every nation should have equality of economic oppor- 
tunity in China, the Open Door policy was soon redefined as a call for 
the territorial and administrative integrity of China; but it never led 
to effective action on our part to ensure China’s independence. Never- 
theless, thanks to our philanthropic and educational work in China, 
our willingness to forgo our share of the Boxer indemnity, and our 
government’s repeated expressions of goodwill, we came to think of the 
United States as China’s close friend and benefactor. 


Thus, on the eve of Pearl Harbor, although all our sympathies lay 
with China, we characteristically continued normal relations with Japan. 
The Japanese attack forced a change in our policies, but it was still 
impossible to give China much military help. In the first months of 
the war, there was no materiel to spare; and later it was all but impos- 
sible to get supplies to China’s isolated armies. Most important, 
Europe took clear priority over Asia in the Allies’ master plan for the 
war; and in Asia, by 1943 the island-hopping strategy obviously had 
replaced the strategy of attacking Japan through China. In military 
terms, China was a sideshow. 

To compensate Chiang Kai-shek politically and to keep China ac- 
tively in the war, Roosevelt pushed China’s recognition as one of the 
Big Four over British objections, and dramatically terminated the 
unequal treaties in 1943. In these moves, Roosevelt had the enthu- 
siastic support of the American public, which felt that America had 
done too little for China in the past and which saw the Generalissimo 
and Madame Chiang as heroic allies against the Japanese aggressor. 
But once again, United States policy, in its generosity and optimism, 
did not necessarily reflect the realities of the situation. 

While we were committing ourselves to Chinese greatness under 
Chiang, the Nationalists were becoming increasingly ineffective. 
Shocking stories of corruption and dictatorial high-handedness came 
out of Chungking. Friction between the Nationalists and the Com- 
munists threatened to erupt into civil war. Chiang also hinted that 
unless American aid were forthcoming on Chinese terms, China might 
be forced to make a separate peace, thereby releasing large Japanese 
forces. The almost unopposed Japanese offensive into the interior of 
south China in 1944 seemed to confirm all these fears. 

By October 1944, when General Joseph W. Stilwell, who favored a 
tough quid pro quo policy toward Chiang, was recalled at the Generalis- 
simo’s insistence, General Patrick J. Hurley had already arrived in 
China. He expressed clearly the goals of American policy: to keep 
China in the war, to support Chiang and the National Government, 
to persuade Chiang to undertake certain reforms, and to promote the 
unity and democracy to which all Chinese parties proclaimed their 
dedication. It is clear now that these goals were irreconcilable, for if 
there was no possibility of withdrawing our support from Chiang, there 
was no way of getting him to make changes he did not choose to make. 
America’s role as mediator was compromised for the same reason. But 
this was far from clear at the time, except to those who knew the situa- 
tion in China most intimately. Americans in 1944-45 were in substan- 
tial agreement that China policy, broadly speaking, was being ade- 


quately handled. This consensus lasted until well after the war; even 
Hurley’s parting broadside (pp. 581-84) failed to shake it. 

Partisanship on the China issue did not really begin until after the 
Congressional elections of November 1946, which put Republican 
majorities into both the Senate and the House and marked the low 
point of the Truman Administration’s influence. In January 1947, 
General George C. Marshall, who had succeeded General Hurley as the 
President’s Special Representative in China, reported the failure of his 
efforts to arrange a peaceful settlement, and returned home to become 
Secretary of State. The Republicans— anticipating the Presidency in 
1948— used their majorities in Congress to exert an increasingly power- 
ful influence on foreign policy. A group of Congressmen (led by 
William Knowland and Styles Bridges in the Senate, and by Walter 
Judd in the House) called for increased aid to the Nationalists in their 
conflict against the Chinese Communists. Nothing could alter their 
belief in the greatness of Chiang Kai-shek, or their conviction that the 
Chinese Communists were Russian puppets. 

During 1947 and 1948, the Republicans used the threat of torpedoing 
the Marshall Plan for the recovery of Europe as a way of getting sup- 
port for China. Among other things, they argued that if a strategy of 
massive foreign aid was appropriate to Europe (i.e., Greece), it should 
also be applied in Asia (i.e., China). So long as this balance of power 
existed on Capitol Hill, the Administration felt it necessary to make 
cautious concessions on the China front in order to move ahead with 
the rest of its foreign program. 

Marshall, who was convinced that only all-out military intervention 
could save Chiang, favored a policy of quiet disengagement from China. 
Not only were America’s resources insufficient for military intervention 
in his opinion, but the American people would not sanction such a 
course. And yet disengagement had almost as high a price, thanks not 
only to the embattled political situation in Washington, but to the 
accumulated weight of past American relations with China. How 
could we simply abandon a traditional friend, an ally who had suffered 
so long, a member of the Big Four by virtue of our own insistence? 
Marshall wavered, then moved from quiet disengagement back to 
limited commitment. The principal concessions of the Administra- 
tion were the resumption of arms shipments to the Chinese Nationalists 
in early 1947, the dispatch of the Wedemeyer mission later that year, 
and the China Aid Act of April 1948. 

This unstable situation lasted until the unexpected Democratic vic- 
tory in the 1948 election. With both houses of Congress once more in 
Democratic hands, the Administration no longer had to buy Repub- 


lican support for its legislative program at the cost of concessions on 
China. Instead of reducing partisanship on the China issue, however, 
the Democratic victory only heightened it. Earlier the Republicans 
had been overconfident and a little complacent; now, in the bitterness 
of defeat, they sought to draw blood wherever they could. 

As the plight of the Nationalists worsened, Republican attacks on 
Administration policy became more frequent and more heated. By 
now, too, a new note had been added— the question of Communist in- 
fluence on China policy in the State Department. In 1947, the Truman 
Administration had begun a program of security investigations that it 
hoped to keep confidential, but a number of sensational cases were re- 
ceiving publicity all during 1948. Eleven Communist leaders were 
trading blows with Judge Harold R. Medina in a Smith Act trial in 
New York City; Judith Coplon of the Justice Department, allegedly a 
Communist, was under indictment for conspiracy; Klaus Fuchs had 
confessed to atomic espionage on behalf of the Soviet Union; and the ex- 
Communist Whittaker Chambers was describing his conspiratorial rela- 
tions with Alger Hiss, a high official of the State Department. There had 
been sporadic charges made earlier against certain career China spe- 
cialists, beginning with Hurley’s letter of resignation in 1945, but by 
1949 the atmosphere had grown feverish. This was the immediate 
background for Senator Joseph McCarthy’s notorious effort, beginning 
in early 1950, to discredit the State Department as a whole. 

The White Paper was thus published in the midst of acrimonious 
controversy over United States China policy, the containment of Com- 
munism abroad, and the fear of subversion at home. 

The idea of a White Paper may have first been suggested by middle- 
level officers in the State Department’s Office of Far Eastern Affairs. 
Secretary of Defense James V. Forrestal recorded in his diary that at a 
conference held on November 26, 1948, “Marshall read a paper from 
some office people in the State Department, who advocated going to the 
American public now to explain the inadequacies of the Chiang Kai-shek 
government.” Marshall went on to say that he had decided, with the 
President’s approval, to reject this suggestion because he felt it would 
administer the coup de grace to Chiang. 1 The idea persisted, however, 
and the following spring, after Dean Acheson’s appointment as Sec- 
retary of State, Acheson obtained Truman’s approval to go ahead with 
the preparation of a White Paper on China. 

When Acheson said later that the White Paper had been published 
in the belief that “the disasters had already overtaken the Nationalist 

1 Walter Millis, ed., The Forrestal Diaries (New York: Viking, 1951), p. 534. 


government,” 2 he meant that the White Paper could not have hastened 
a collapse that was already complete. By implication, the decision to 
publish the White Paper reflected the feeling that since we could no 
longer effectively influence events in China, we should not be entangled 
in them. This was the agonizing decision Marshall had shrunk from 
making a year earlier, when there may still have been grounds for hop- 
ing that a Nationalist collapse could be averted. By the spring of 1949, 
such grounds existed no longer. The Nationalist cause was in ruins: in 
January, Chiang Kai-shek quit the Presidency and Peiping fell; in 
April, Communist troops crossed the Yangtze without opposition, and 
peacefully occupied Shanghai a few days later. 

The directive from President Truman and Secretary Acheson to the 
compilers of the White Paper called for a completely objective record. 
Yet the Administration plainly hoped this record would show that we 
had done as much as we could, that our course had been basically cor- 
rect, and that the impending fall of China to the Communists was in no 
way attributable to American policy. The White Paper was issued to 
counter largely Republican criticism. In Truman’s words, “The role 
of this government in its relations with China has been subject to con- 
siderable misrepresentation, distortion, and misunderstanding. Some 
of these attitudes arose because this government was reluctant to reveal 
certain facts . . .” 3 Truman believed his two goals— objectivity and 
justification— were compatible. His critics, as it turned out, found the 
White Paper neither objective nor convincing. 

In overall charge of the project was W. Walton Butterworth, who was 
concurrently Director of the Office of Far Eastern Affairs and Acting 
Assistant Secretary of State for Far Eastern Affairs. Because of the 
weight of his duties, Butterworth delegated the actual preparation of the 
White Paper to his division officers, several of whom he detailed to full- 
time work on the project. Beginning about March 1949, the White 
Paper became a round-the-clock effort for those involved. Most of the 
work of writing and editing was done by five or six officers with recent 
and extensive experience in China. 4 Only materials in the files of the 
Department of State were used. To have searched for and sought the 
release of documents in other agencies— especially the former War 
Department— would have greatly delayed publication of the White 
Paper, and Acheson was anxious that it be issued as soon as possible. 

2 U.S. Senate, Committee on Armed Services and Committee on Foreign Relations, 
Hearings on the Military Situation in the Far East, 82d Cong., 1st Sess. (1951), p. 1770. 

3 Department of State, Bulletin , Aug. 15, 1949, p. 237. 

4 Many others helped in the preparation of the document, particularly in the Divi- 
sion of Historical Policy Research under G. Bernard Noble, but unless one counts 
archivists, secretaries, and clerks, the total number was far less than the eighty persons 
alleged by the journalist Arthur Krock. 


This complete reliance on State Department files later led to charges 
that the White Paper was inadequate in its coverage. 

In late June 1949, when the White Paper was nearly finished, Acheson 
asked Ambassador-at-Large Philip C. Jessup to read the document and 
suggest changes in it. Jessup, a professor of international law with a 
distinguished career at Columbia, was at that time the United States 
representative to the United Nations General Assembly and had been 
working on negotiations concerning the Berlin blockade. Later, during 
McCarthy’s attacks on Jessup, the erroneous impression was given that 
the White Paper was largely his creation. Actually, the changes he 
suggested were few. Jessup did have an active hand, however, in 
preparing Acheson’s Letter of Transmittal, the most controversial 
document in the volume. The letter subsequently went through 
many hands and many drafts before Acheson finally reworked it to 
suit himself. 

As one might expect, the White Paper is composed primarily of docu- 
ments and excerpts from documents, nearly all of which were highly 
classified before the White Paper was published. This preponderance 
is greater than appears at first sight, because even the narrative section 
contains long quotations from documents. Although the period of spe- 
cial reference is from 1944 to 1949, nearly one-fifth of the volume deals 
with the century from 1844 to 1943. There is very heavy emphasis — 
about 40 per cent of the total — on 1947 and 1948 (there are only a very 
few documents dating from early 1949). The volume’s coverage is 
least extensive for 1944 and 1945. 5 Originally scheduled for release at 
the end of July, the White Paper was held up for about a week by print- 
ing difficulties. Because of the rush to publish, no index was prepared. 
The White Paper was released to the public on August 5, 1949, at a 
price of three dollars. 

In issuing the White Paper, the Administration was proceeding in the 
belief— or the hope— that the record would speak for itself. Though its 
principal significance lay in domestic politics, one could expect the White 
Paper to have a very pronounced impact on both parties in China. Let 
us consider this impact briefly before turning to its reception in the 
United States. 

The Chinese Communists made the White Paper the center of their 
first mass anti-American campaign. There had been much Communist- 
inspired criticism of the United States in the past, but there remained in 

5 Extensive and fascinating new documentation covering 1944 is now available in 
Department of State, Foreign Relations of the United States, 1944 > Vol. VI: China 
(Washington, D.C., 1967), 1,206 pp. Similar volumes covering 1941, 1942, and 1943 
were published earlier. 


China considerable reservoirs of good feeling, particularly among the 
intellectuals and bourgeoisie in the cities. These reservoirs the Party 
now set out to drain, as a part of the larger movement to eliminate 
Western influence from China. 

The last five articles in Volume IV of Mao’s Selected Works denounce 
the United States in general and the White Paper in particular. Mao’s 
editors describe the goals of the campaign when they say that these 
pieces “exposed the imperialist nature of United States policy toward 
China” and “criticized the illusions about U.S. imperialism harbored by 
some of the bourgeois intellectuals.” 6 These articles were the signal for 
an intense campaign that reached wherever Communist influence was 
felt. In Nanking, for example, during more than a month following 
Mao’s denunciation, only one issue of the Party paper failed to attack 
the White Paper, and sometimes additional pages were needed for this 
purpose. Mass rallies, well-attended by students and American- 
trained intellectuals, were held in all cities under Communist control. 

The campaign sought to discredit the United States for everything it 
had done in China since the Treaty of Wanghia in 1844, and especially 
for its recent actions. The Chinese Communists did not find it neces- 
sary, or desirable, to translate the White Paper. Instead, they concen- 
trated almost entirely on extracts from Acheson’s Letter of Transmittal: 
the amount of aid given to the Nationalists; the assertion that the 
United States had done all it could to support Chiang; the claim that the 
“Communist leaders have foresworn their Chinese heritage” and are 
subservient to Russia; and above all, the statement that the United 
States should encourage developments to “throw off the foreign yoke.” 7 

In this campaign, John Leighton Stuart, a former president of Yen- 
ching University, was particularly singled out, both as our last ambassa- 
dor on the mainland, and also because he represented so well all that 
was finest in the American philanthropic and educational tradition in 
China. In “Farewell, Leighton Stuart!” Mao denounced him as one 
who “used to pretend to love both the United States and China.” The 
article ends venomously: “Leighton Stuart has departed and the White 
Paper has arrived. Very good. Very good. Both events are worth 
celebrating.” 8 

In Nationalist circles, the public and official reaction to the White 
Paper was surprisingly mild. When it became known, late in July, that 

6 Mao Tse-tung, Selected Works (Peking: Foreign Languages Press, 1961), IV, 426. 

7 Deliberately or not, one phrase (on p. xvi) was usually mistranslated in such a way 
that the United States appeared to be calling on Western-trained Chinese to revolt: 
“ultimately the profound civilization and the democratic individualism [the Commu- 
nist press here translates ‘democratic individualists’] of China will reassert themselves 
and she will throw off the foreign yoke.” 

8 Mao, Selected Works, IV, 439. 


such a document was about to be published, V. K. Wellington Koo, the 
Chinese Ambassador, requested postponement. On August 6, he ac- 
knowledged that China might have been “guilty of acts of commission 
and omission in the past” but asserted that “mistakes have not been 
confined to my country.” He stressed the common cause that China 
was making still with the United States for freedom from Communism. 9 
In Canton, Acting President Li Tsung-jen’s capital, there was anger and 
dismay. Officially, however, Foreign Minister George Yeh stated on 
August 16 that whereas the Nationalists took “serious exception” to the 
White Paper on many points, “it is not the intention of the Chinese 
Government to engage in controversy over past issues.” He was glad 
to see, he said, that the two countries agreed completely on at least two 
points: that the Chinese Communists were “thorough Marxists and 
tools of Moscow,” and that the Soviet Union had violated the Treaty of 
Friendship and Alliance with China. 10 

Indirectly, the White Paper probably had something to do with the 
later reforms in the Kuomintang. As CITen Ch’eng, then Governor of 
Taiwan and later Vice-President, said at the time, “The White Paper 
has awakened us; we must now start on the road to self-help. Hence 
the publication of the White Paper will not cause us harm.” 11 Chiang 
Kai-shek, then in nominal retirement, made no public statement and 
advised against an official Nationalist effort to refute the White Paper. 
Behind the scenes, however, the Nationalists continued to seek United 
States military aid, and to press their cause through their advocates in 
this country. 

The reaction in the United States was predictably impassioned. No 
one could assert— or tried to assert— that United States policy in China 
had been successful. The best the Administration could hope for was 
acceptance of the White Paper at face value. A few liberal publica- 
tions, among them the New Republic and the Washington Post , accepted 
it on these terms, but their voices went almost unheard in the clamor of 
criticism. The White Paper was attacked both for the policies it de- 
scribed and as a record of the effort to carry out those policies. 

The main charges against the White Paper as a historical document 
were overall bias, omission and distortion, and premature publication. 
According to an editorial in the New York Times , “This inquest on 
China is not the work of a serene and detached coroner but of a vitally 
interested party to the catastrophe.” Time , speaking for the Luce 
publications, called it a “lawyer’s brief.” Patrick Hurley, a vitally 
interested party himself, denounced it as a “smooth alibi for the pro- 

9 New York Times , Aug. 8, 1949, p. 2. 

10 Ibid., Aug. 17, 1949, p. 4. 

11 Ibid., Aug. 8, 1949, p. 2. 


Communists in the State Department who have engineered the over- 
throw of our ally.” Many argued that the Administration was trying 
to put all the blame on Chiang Kai-shek and assume none itself. 

The State Department was also accused of deliberately omitting or 
distorting documents that did not support the Truman- Acheson policy. 
In the House, Walter Judd alleged sixteen instances of omission, falsi- 
fication, or distortion. Acheson answered the allegations point by 
point, and repeated his assertion that the White Paper was a “fair and 
honest record”; the most important document referred to by Judd, he 
pointed out, was not held by the State Department and was thus not 
eligible for inclusion. 12 A few felt that the White Paper was slanted in 
the other direction. Owen Lattimore, soon to be himself the center of 
controversy, saw the White Paper as an effort to show “that in pursuit 
of impeccably anti-Russian aims the United States had engaged in as 
much intervention as the traffic could possibly bear.” 13 

In handling the materials of history, each act of selection is also an act 
of judgment, and therefore the charge of bias is never completely an- 
swerable. But the charge that the White Paper was deliberately 
slanted is not substantiated by any materials that have since been made 
public. For the period from 1945 through 1948, the White Paper still 
stands as our most important single source for the study of United 
States relations with China. 

The White Paper was also criticized for its timing. To some, the 
Nationalists were “still stubbornly squirming with life,” and this docu- 
ment would undermine their efforts to stem the Communist tide. There 
were also those, including some within the State Department, who 
agreed with everything about the White Paper except its publication. 
They felt it was unnecessary and undignified for the United States to 
rush into public print with matters best handled behind closed doors, 
and with documents recently composed on the writers' assumption of 
official privacy. 

On the level of policy, critics of the White Paper generally took the 
line that America's misguided or calculated failure to give Chiang Kai- 
shek the help he needed to beat the Chinese Communists was leading to 
Russian control of Asia. This charge broke down into a number of 
more specific charges: (1) that at Yalta the United States had sold China 
down the river to bribe Russia to enter a war we had already won; (2) 
that the Marshall mission's effort to form a coalition government in 
China had been designed to force the Nationalists into the lethal em- 
brace of the Communists; (3) that in 1947 the Administration had sup- 

12 Judd made his charges on August 19. For Acheson’s rebuttal, see Department of 
State, Bulletin, Sept. 5, 1949, pp. 350-52, 359. 

13 The Nation , Sept. 3, 1949, p. 223. 


pressed the Wedemeyer Report, which had recognized the Communist 
threat to Asia and had called for aid to the Nationalists; (4) that reason- 
able amounts of military aid, without American military participation 
except for advisers, would have enabled Chiang to defeat the Chinese 
Communists; (5) that disloyalty and pro-Communism in the State De- 
partment had an evil influence on our China policy. 

Although most of these charges remain in some minds controversial to 
this day, some things seem clearer now than they did twenty years ago. 
While Yalta, for example, was surely one of Roosevelt’s least auspicious 
exercises in personal diplomacy, the record shows that Russia’s partici- 
pation in the decisive struggle against Japan was still thought absolutely 
necessary. Furthermore, Chiang had explicitly requested the United 
States to act as mediator between China and Russia; in order to lure 
Stalin away from the Chinese Communists, he had offered to make some 
(not all) of the Yalta concessions that were later so bitterly assailed. 

The unification of China by political means (that is, some form of 
multi-party or coalition government) was the announced aim of both 
the Nationalists and the Communists even before General Hurley ar- 
rived on the scene in 1944. Not only Marshall, but Hurley before him, 
tried to find some formula that both parties could agree on; indeed, 
Hurley himself was the principal drafter of a set of proposals for the 
Chinese Communists to present to the Nationalists. 14 He called its 
terms “eminently fair,” adding that “if there is a breakdown in the par- 
leys it will be the fault of the Government and not the Communists.” 
So far as concessions to the Communist viewpoint are concerned, Hur- 
ley’s proposal, which the Kuomintang found utterly unacceptable and 
which Hurley complained to Roosevelt “had not been treated with due 
consideration,” far surpassed any proposal later made by Marshall. 

Acheson’s Letter of Transmittal stated that the Wedemeyer Report 
had not been released because it called for Russian participation in a 
five-power guardianship over Manchuria. But other considerations 
were probably equally compelling. One was General Wedemeyer’s 
blunt indictment of Nationalist corruption and incompetence, which 
was about as sweeping in 1947 as the White Paper’s two years later. 
Another was the self-contradictory nature of Wedemeyer’s recommenda- 
tions: he concluded that “until drastic political and economic reforms 
are undertaken, United States aid cannot accomplish its purpose,” yet 
he called for extensive assistance to China “as early as practicable.” A 
third was Wedemeyer’s ill-considered proposal that aid be granted only 
if China requested advisers with considerable power in “specified eco- 
nomic and military fields.” Chiang had never granted such powers in 

14 Foreign Relations , 19J+J+: China , pp. 666-735, documents under file no. 1049; the 
two brief quotations in the next sentence are from p. 693 and p. 734. 


the past; had he done so now, as Marshall realized, it would have been a 
long step toward full-scale American involvement in the Chinese civil 

As for the amount of American aid to China, the whole issue has a 
quality of unreality. Estimates of our aid to the Nationalist Govern- 
ment ranged from a low of $110 million (Senators Bridges, Knowland, 
Pat McCarran, and Kenneth Wherry, and the Chinese Embassy in 
Washington) to a high of $5.9 billion (Mao). The State Department 
(see pp. 1042-53) showed postwar aid of just over $2 billion, about half 
of which was classed as military aid. To the Nationalists and their 
supporters, any amount of aid would have been insufficient if it failed to 
defeat the Communists. To those who opposed further military aid, 
the fall of the Kuomintang was the result of its own inadequacies; the 
waste of past aid showed that future aid would do no good, and nothing 
in Chiang’s record warranted the risk of an open-ended American com- 
mitment of unforeseeable size. 

Surely the ugliest and probably the most damaging aspect of the 
furor was the allegation of Communist influence in the State Depart- 
ment. McCarthy’s charges finally proved baseless, but in the mean- 
time lives and careers were ruined and lasting harm was done to the 
conduct of America’s foreign policy. The reception of the White Paper 
instructed many government officials in the value of caution, and per- 
suaded numbers of capable young men to seek careers elsewhere. Some 
of America’s most able and best qualified China specialists were dis- 
missed from the State Department, later to be offered reinstatement and 
back pay when it was shown that there was no case against them. Others 
were transferred to less sensitive positions, where often the road to ad- 
vancement was blocked by their previous association with fthina. 
Some were persuaded to accept early retirement. In any case, their 
long experience and intimate knowledge of China were lost. Among 
the best known of these men were John Carter Vincent, John Stewart 
Service, and John Paton Davies. Their reports on China in the 1940’s 
have stood the test of time; by contrast, what few criticisms might be 
made of their work now seem hardly more than cavils. Many of the 
reports for which they were later condemned were penetrating insights 
into Chinese political realities. They saw clearly, and warned their 
superiors, of the danger of tying the United States irrevocably to a re- 
gime that was rapidly discrediting itself and might well be unable to 
survive. For telling unpleasant truths about the Nationalists, they 
were later called Communists. Professor John K. Fairbank’s tribute 
to them is no more than just: “These men were true China specialists 
and we have no one like them today [1967]. In our lifetime we shall 
never again get this much of a grasp of the Chinese scene.” 


Almost alone in its judiciousness and insight was Walter Lippmann's 
reaction to the White Paper. 15 If Acheson was right that nothing the 
United States had done or left undone had affected the outcome in 
China (p. xvi), then, Lippmann asked, why did we continue so long and 
at such cost to support the side we knew was going to lose? At the 
time, he was one of the very few who saw and described Marshall's 
dilemma, which reflected in a modern form America's traditional in- 
ability to bring its China policy into line with its effective influence in 

Both critics and supporters of the Truman Administration knew that 
the White Paper marked the end of an era, and both sides called for a 
thoroughgoing reappraisal of our Far Eastern policy. Just before the 
publication of the White Paper, Acheson announced that such a review 
had been initiated within the State Department, that top-level outside 
advice was being sought, and that close liaison would be maintained 
with Congress and other agencies of the executive branch. On October 
6-8, 1949, at a closed-door session on Far Eastern policy in Washington 
some twenty-five China specialists, international businessmen, and 
public figures (including Marshall, George F. Kennan, and Harold E. 
Stassen) expressed their opinions on what course American policy should 
take. 16 Subsequently, the trend of policy, which with certain excep- 
tions represented rather well the sense of these discussions, was to with- 
hold recognition from the Communists while at the same time further 
dissociating the United States from the Nationalists. The United 
States also indicated it would regard any Chinese Communist military 
or political activity beyond the borders of China as a threat to peace. 

This policy was plainly expressed in January 1950. In a series of 
statements, Truman and Acheson indicated that the United States 
would not provide military aid or advice to “the Chinese forces on 
Formosa," that we intended to keep “hands off," and that the island, 
having little strategic significance, lay outside our first line of defense in 
the Western Pacific. Criticism of the Administration reached a new 
pitch, fed now by McCarthy's charges, but the policy of disengagement 
remained in force. 

Early in the morning of June 25, 1950, North Korea launched its in- 
vasion of South Korea. Truman reacted immediately through the 
United Nations. Two days later, on June 27, he sent the Seventh Fleet 
into the Straits of Formosa with orders to prevent any attack on the is- 

15 In the columns of the New York Herald Tribune on Sept. 6, 8, and 12, 1949. 

16 The transcript of the discussions is contained in U.S. Senate, Committee on the 
Judiciary, Subcommittee to Investigate the Administration of the Internal Security 
Act, Hearings on the Institute of Pacific Relations , 82d Cong., 1st Sess. (1951), pp. 1551- 


land. Our present commitment to the Nationalist Government dates 
from that order. The Korean War thus brought to a sudden end the 
policy that the Administration had followed for two years, and com- 
mitted us once again to involvement in the Chinese civil war. 

Because history never repeats itself exactly, no two historical situa- 
tions are entirely analogous. But a number of parallels between the 
more recent situation in Vietnam and the earlier situation in China are 
too striking to be ignored. In both situations, our recognition and 
support went to a regime with acknowledged shortcomings but to which 
there seemed to be no adequate alternative. In both there existed the 
elements of both civil war and international aggression, with a great 
debate about which was the dominant force. In both there were abun- 
dant predictions that limited aid and advice, without direct American 
military participation, would bring victory in a short period of time. And 
in both, withdrawal became more difficult as time went on. The ob- 
vious difference is that in Vietnam the decision was made to engage. In 
Vietnam, smaller in size and population than many Chinese provinces, 
what began as limited and indirect assistance has grown to a half million 
men and $2 billion per month. In retrospect, it appears that Marshall 
saw clearly where further intervention would have led in China (p. 382) : 
“The U.S. would have to be prepared virtually to take over the Chinese 
Government and administer its economic, military and governmental 
affairs. ... It would involve this Government in a continuing commit- 
ment from which it would be practically impossible to withdraw, and it 
would very probably involve grave consequences to this nation by 
making of China an arena of international conflict. ” 

These reflections lead us back to crucial questions, questions that the 
White Paper raises but cannot fully answer because America itself has 
not yet given the answers. If in China there was a gap between what 
we said and what we did, in Vietnam the United States has tried to close 
this gap not by expressing its goals in less sweeping terms but by pur- 
suing them with vastly greater force. Are the goals of United States 
Asian policy justified? Is the United States able to achieve such goals? 
And at what point does the employment of force render meaningless the 
very goals it seeks? In China as in Vietnam, other issues may have 
seemed more immediate, but these questions persist. Parts of the an- 
swer may lie in a purblind anti-Communism, in the illusion of American 
omnipotence, and in the force of American self-righteousness. Other 
answers may lie in the cultural gap across the Pacific and our underesti- 
mation of the difficulties involved; and still other answers may suggest 
themselves to attentive readers of the record that follows. A partial 
answer is perhaps all we shall have in our time. 


United States Relations With 

With Special Reference 
to the Period 1944-1949 


Letter of Transmittal 

Department of State 
Washington, July SO , 1949 

The President: In accordance with your wish, I have had com- 
piled a record of our relations with China, special emphasis being 
placed on the last five years. This record is being published and will 
therefore be available to the Congress and to the people of the United 

Although the compilation is voluminous, it necessarily covers a 
relatively small part of the relations between China and the United 
States. Since the beginning of World War II, these relations have 
involved many Government departments and agencies. The prepara- 
tion of the full historical record of that period is by no means yet 
complete. Because of the great current interest in the problems con- 
fronting China, I have not delayed publication until the complete 
analysis could be made of the archives of the National Military Estab- 
lishment, the Treasury Department, the Lend-Lease Administration, 
the White House files and many other official sources. However, I 
instructed those charged with the compilation of this document to 
present a record which would reveal the salient facts which determined 
our policy toward China during this period and which reflect the 
execution of that policy. This is a frank record of an extremely com- 
plicated and most unhappy period in the life of a great country to 
which the United States has long been attached by ties of 
closest friendship. No available item has been omitted because 
it contains statements critical of our policy or might be the basis of 
future criticism. The inherent strength of our system is the respon- 
siveness of the Government to an informed and critical public opinion. 
It. is precisely this informed and critical public opinion which totali- 
tarian governments, whether Rightist or Communist, cannot endure 
and do not tolerate. 

The interest of the people and the Government of the United States 
in China goes far back into our history. Despite the distance and 
broad differences in background which separate China and the United 
States, our friendship for that country has always been intensified by 




the religious, philanthropic and cultural ties which have united the 
two peoples, and has been attested by many acts of good will over a 
period of many years, including the use of the Boxer indemnity for 
the education of Chinese students, the abolition of extraterritoriality 
during the Second World War, and our extensive aid to China dur- 
ing and since the close of the war. The record shows that the United 
States has consistently maintained and still maintains those funda- 
mental principles of our foreign policy toward China which include 
the doctrine of the Open Door, respect for the administrative and 
territorial integrity of China, and opposition to any foreign domina- 
tion of China. It is deplorable that respect for the truth in the 
compilation of this record makes it necessary to publish an account of 
facts which reveal the distressing situation in that country. I have 
not felt, however, that publication could be withheld for that reason. 

The record should be read in the light of conditions prevailing when 
the events occurred. It must not be forgotten, for example, that 
throughout World War II we were allied with Russia in the struggle 
to defeat Germany and Italy, and that a prime object of our policy 
was to bring Russia into the struggle against Japan in time to be of 
real value in the prosecution of the war. In this period, military 
considerations were understandably predominant over all others. Our 
most urgent purpose in the Far East was to defeat the common enemy 
and save the lives of our own men and those of our comrades-in-arms, 
the Chinese included. We should have failed in our manifest duty 
had we pursued any other course. 

In the years since V-J Day, as in the years before Pearl Harbor, 
military considerations have been secondary to an earnest desire on our 
part to assist the Chinese people to achieve peace, prosperity and in- 
ternal stability. The decisions and actions of our Government to pro- 
mote these aims necessarily were taken on the basis of information 
available at the time. Throughout this tragic period, it has been fully 
realized that the material aid, the military and technical assistance, 
and the good will of the United States, however abundant, could not 
of themselves put China on her feet. In the last analysis, that can be 
done only by China herself. 

Two factors have played a major role in shaping the destiny of 
modern China. 

The population of China during the eighteenth and nineteenth cen- 
turies doubled, thereby creating an unbearable pressure upon the land. 
The first problem which every Chinese Government has had to face 
is that of feeding this population. So far none has succeeded. The 
Kuomintang attempted to solve it by putting many land-reform laws 
on the statute books. Some of these laws have failed, others have 



been ignored. In no small measure, the predicament in which the 
National Government finds itself today is due to its failure to provide 
China with enough to eat. A large part of the Chinese Communists’ 
propaganda consists of promises that they will solve the land problem. 

The second major factor which has shaped the pattern of contem- 
porary China is the impact of the West and of Western ideas. For 
more than three thousand years the Chinese developed their own high 
culture and civilization, largely untouched by outside influences. Even 
when subjected to military conquest the Chinese always managed in 
the end to subdue and absorb the invader. It was natural therefore 
that they should come to look upon themselves as the center of the 
world and the highest expression of civilized mankind. Then in the 
middle of the nineteenth century the heretofore impervious wall of 
Chinese isolation was breached by the West. These outsiders brought 
with them aggressiveness, the unparalleled development of Western 
technology, and a high order of culture which had not accompanied 
previous foreign incursions into China. Partly because of these 
qualities and partly because of the decay of Manchu rule, the 
Westerners, instead of being absorbed by the Chinese, introduced new 
ideas which played an important part in stimulating ferment and 

By the beginning of the twentieth century, the combined force of 
overpopulation and new ideas set in motion that chain of events which 
can be called the Chinese revolution. It is one of the most imposing 
revolutions in recorded history and its outcome and consequences 
are yet to be foreseen. Out of this revolutionary whirlpool emerged 
the Kuomintang, first under the leadership of Dr. Sun Yat-sen, and 
later Generalissimo Chiang Kai-shek, to assume the direction of the 
revolution. The leadership of the Kuomintang was not challenged 
until 1927 by the Chinese Communist party which had been organized 
in the early twenties under the ideological impetus of the Russian 
revolution. It should be remembered that Soviet doctrine and prac- 
tice had a measurable effect upon the thinking and principles of 
Dr. Sun Yat-sen, particularly in terms of economics and party or- 
ganization, and that the Kuomintang and the Chinese Communists 
cooperated until 1927 when the Third International demanded a pre- 
dominant position in the Government and the army. It was this de- 
mand which precipitated the break between the two groups. To a 
large extent the history of the period between 1927 and 1937 can be 
written in terms of the struggle for power between the Kuomintang 
and the Chinese Communists, with the latter apparently fighting a 
losing battle. During this period the Kuomintang made considerable 
progress in its efforts to unify the country and to build up the nation’s 



financial and economic strength. Somewhere during this decade, 
however, the Kuomintang began to lose the dynamism and revolu- 
tionary fervor which had created it, while in the Chinese Communists 
the fervor became fanaticism. 

Perhaps largely because of the progress being made in China, the 
Japanese chose 1937 as the departure point for the conquest of China 
proper, and the goal of the Chinese people became the expulsion of 
a brutal and hated invader. Chinese resistance against Japan dur- 
ing the early years of the war compelled the unqualified admiration 
of freedom-loving peoples throughout the world. Until 1940 this 
resistance was largely without foreign support. The tragedy of these 
years of war was that physical and human devastation to a large ex- 
tent destroyed the emerging middle class which historically has been 
the backbone and heart of liberalism and democracy. 

In contrast also to the unity of the people of China in the war 
against Japan were the divided interests of the leaders of the Kuo- 
mintang and of the Chinese Communists. It became apparent in the 
early forties that the leaders of the Government, just as much as the 
Communist leaders, were still as preoccupied with the internal 
struggle for power as they were with waging war against Japan. 
Once the United States became a participant in the war, the Kuomin- 
tang was apparently convinced of the ultimate defeat of Japan and 
saw an opportunity to improve its position for a show-down struggle 
with the Communists. The Communists, for their part, seemed to 
see in the chaos of China an opportunity to obtain that which had 
been denied them before the Japanese war, namely, full power in 
China. This struggle for power in the latter years of the war con- 
tributed largely to the partial paralysis of China’s ability to resist. 

It was precisely here that two of the fundamental principles of 
United States policy in regard to China — noninterference in its in- 
ternal affairs and support of its unity and territorial integrity — came 
into conflict and that one of them also conflicted with the basic in- 
terests of the Allies in the war against J apan. It seemed highly prob- 
able in 1943 and 1944 that, unless the Chinese could subordinate their 
internal interests to the larger interest of the unified war effort 
against Japan, Chinese resistance would become completely ineffective 
and the Japanese would be able to deprive the Allies of valuable bases, 
operating points and manpower in China at a time when the outcome 
of the war against Japan was still far from clear. In this situation 
and in the light of the paramount necessity of the most vigorous prose- 
cution of the war, in which Chinese interests were equally at stake 
with our own, traditional concepts of policy had to be adapted to a new 
and unprecedented situation. 



After Pearl Harbor we expanded the program of military and 
economic aid which we had inaugurated earlier in 1941 under the 
Lend-Lease Act. That program, described in chapter I of the at- 
tached record, was far from reaching the volume which we would 
have wished because of the tremendous demands on the United States 
from all theaters of a world-wide war and because of the difficulties 
of access to a China all of whose ports were held by the enemy. Never- 
theless it was substantial. 

Representatives of our Government, military and civilian, who were 
sent to assist the Chinese in prosecuting the war soon discovered that, 
as indicated above, the long struggle had seriously weakened the 
Chinese Government not only militarily and economically, but also 
politically and in morale. The reports of United States military and 
diplomatic officers reveal a growing conviction through 1943 and 1944 
that the Government and the Kuomintang had apparently lost the 
crusading spirit that won them the people’s loyalty during the early 
years of the war. In the opinion of many observers they had sunk 
into corruption, into a scramble for place and power, and into reliance 
on the United States to win the war for them and to preserve their 
own domestic supremacy. The Government of China, of course, had 
always been a one-party rather than a democratic government in the 
Western sense. The stresses and strains of war were now rapidly 
weakening such liberal elements as it did possess and strengthening 
the grip of the reactionaries who were indistinguishable from the 
war lords of the past. The mass of the Chinese people were coming 
more and more to lose confidence in the Government. 

It was evident to us that only a rejuvenated and progressive Chinese 
Government which could recapture the enthusiastic loyalty of the 
people could and would wage an effective war against Japan. Amer- 
ican officials repeatedly brought their concern with this situation to 
the attention of the Generalissimo and he repeatedly assured them that 
it would be corrected. He made, however, little or no effective effort 
to correct it and tended to shut himself off from Chinese officials who 
gave unpalatable advice. In addition to a concern over the effect 
which this atrophy of the central Chinese administration must have 
upon the conduct of the war, some American observers, whose reports 
are also quoted in the attached record, were concerned over the effect 
which this deterioration of the Kuomintang must have on its eventual 
struggle, whether political or military, with the Chinese Communists. 
These observers were already fearful in 1943 and 1944 that the Na- 
tional Government might be so isolating itself from the people that 
in the postwar competition for power it would prove itself impotent 



to maintain its authority. Nevertheless, we continued for obvious 
reasons to direct all our aid to the National Government. 

This was of course the period during which joint prosecution of 
the war against Nazi Germany had produced a degree of cooperation 
between the United States and Russia. President Roosevelt was de- 
termined to do what he could to bring about a continuance in the post- 
war period of the partnership forged in the fire of battle. The peoples 
of the world, sickened and weary with the excesses, the horrors, and the 
degradation of the war, shared this desire. It has remained for the 
postwar years to demonstrate that one of the major partners in 
this world alliance seemingly no longer pursues this aim, if indeed 
it ever did. 

When Maj. Gen. Patrick J. Hurley was sent by President Roosevelt 
to Chungking in 1944 he found what he considered to be a willingness 
on the part of the National Government and the Chinese Communists 
to lay aside their differences and cooperate in a common effort. Al- 
ready they had been making sporadic attempts to achieve this result. 

Previously and subsequently, General Hurley had been assured by 
Marshal Stalin that Russia had no intention of recognizing any 
government in China except the National Government with Chiang 
Kai-shek as its leader. It may be noted that during the late war years 
and for a time afterwards Marshal Stalin reiterated these views to 
American officials. He and Molotov expressed the view that China 
should look to the United States as the principal possible source of 
aid. The sentiments expressed by Marshal Stalin were in large part 
incorporated in the Sino-Soviet treaty of 1945. 

From the wartime cooperation with the Soviet Union and from the 
costly campaigns against the Japanese came the Yalta Agreement. 
The American Government and people awaited with intense anxiety 
the assault on the main islands of J apan which it was feared would cost 
up to a million American casualties before Japan was conquered. 
The atomic bomb was not then a reality and it seemed impossible that 
the war in the Far East could be ended without this assault. It thus 
became a primary concern of the American Government to see to it that 
the Soviet Union enter the war against Japan at the earliest possible 
date in order that the Japanese Army in Manchuria might not be 
returned to the homeland at the critical moment. It was considered 
vital not only that the Soviet Union enter the war but that she do 
so before our invasion of Japan, which already had been set for the 
autumn of 1945. 

At Yalta, Marshal Stalin not only agreed to attack Japan within 
two or three months after V-E Day but limited his “price” with refer- 
ence to Manchuria substantially to the position which Russia had 



occupied there prior to 1904. We for our part, in order to obtain this 
commitment and thus to bring the war to a close with a consequent 
saving of American, Chinese and other Allied lives, were prepared to 
and did pay the requisite price. Two facts must not, however, be 
lost sight of in this connection. First, the Soviet Union when she 
finally did enter the war against Japan, could in any case have seized 
all the territories in question and considerably more regardless of what 
our attitude might have been. Second, the Soviets on their side in the 
Sino-Soviet Treaty arising from the Yalta Agreement, agreed to give 
the National Government of China moral and material support and 
moreover formalized their assurances of noninterference in China’s in- 
ternal affairs. Although the unexpectedly early collapse of Japanese 
resistance later made some of the provisions of the Yalta Agreement 
seem unnecessary, in the light of the predicted course of the war at 
that time they were considered to be not only justified but clearly 
advantageous. Although dictated by military necessity, the Agree- 
ment and the subsequent Sino-Soviet Treaty in fact imposed limita- 
tions on the action which Russia would, in any case, have been in a 
position to take. 

For reasons of military security, and for those ohly, it was con- 
sidered too dangerous for the United States to consult with the Na- 
tional Government regarding the Yalta Agreement or to communicate 
its terms at once to Chungking. We were then in the midst of the 
Pacific War. It was felt that there was grave risk that secret informa- 
tion transmitted to the Nationalist capital at this time would become 
available to the Japanese almost immediately. Under no circum- 
stances, therefore, would we have been justified in incurring the secur- 
ity risks involved. It was not until June 15, 1945, that General Hurley 
was authorized to inform Chiang Kai-shek of the Agreement. 

In conformity with the Russian agreement at Yalta to sign a treaty 
of friendship and alliance with Nationalist China, negotiations be- 
tween the two nations began in Moscow in July 1945. During their 
course, the United States felt obliged to remind both parties that the 
purpose of the treaty was to implement the Yalta Agreement — no 
more, no less — and that some of the Soviet proposals exceeded its pro- 
visions. The treaty, which was signed on August 14, 1945, was greeted 
with general satisfaction both in Nationalist China and in the United 
States. It was considered that Russia had accepted definite limita- 
tions on its activities in China and was committed to withhold all 
aid from the Chinese Communists. On September 10, however, our 
embassy in Moscow cautioned against placing undue confidence in the 
Soviet observance of either the spirit or letter of the treaty. The 



subsequent conduct of the Soviet Government in Manchuria has amply 
justified this warning. 

When peace came the United States was confronted with three 
possible alternatives in China : (1) it could have pulled out lock, stock 
and barrel; (2) it could have intervened militarily on a major scale 
to assist the Nationalists to destroy the Communists ; (3) it could, while 
assisting the Nationalists to assert their authority over as much of 
China as possible, endeavor to avoid a civil war by working for a 
compromise between the two sides. 

The first alternative would, and I believe American public opinion 
at the time so felt, have represented an abandonment of our inter- 
national responsibilities and of our traditional policy of friendship 
for China before we had made a determined effort to be of assistance. 
The second alternative policy, while it may look attractive theoreti- 
cally and in retrospect, was wholly impracticable. The Nationalists 
had been unable to destroy the Communists during the 10 years 
before the war. Now after the war the Nationalists were, as indicated 
above, weakened, demoralized, and unpopular. They had quickly 
dissipated their popular support and prestige in the areas liberated 
from the Japanese by the conduct of their civil and military officials. 
The Communists on the other hand were much stronger than they had 
ever been and were in control of most of North China. Because of 
the ineffectiveness of the Nationalist forces which was later to be tragi- 
cally demonstrated, the Communists probably could have been dis- 
lodged only by American arms. It is obvious that the American people 
would not have sanctioned such a colossal commitment of our armies in 
1945 or later. We therefore came to the third alternative policy 
whereunder we faced the facts of the situation and attempted to 
assist in working out a modus vivendi which would avert civil war but 
nevertheless preserve and even increase the influence of the National 

As the record shows, it was the Chinese National Government itself 
which, prior to General Hurley’s mission, had taken steps to arrive 
at a working agreement with the Communists. As early as September 
1943 in addressing the Kuomintang Central Executive Committee, 
the Generalissimo said, “we should clearly recognize that the Commu- 
nist problem is a purely political problem and should be solved by 
political means.” He repeated this view on several occasions. Com- 
prehensive negotiations between representatives of the Government 
and of the Communists, dealing with both military cooperation and 
civil administration, were opened in Sian in May 1944. These nego- 
tiations, in which Ambassador Hurley later assisted at the invitation 
of both parties between August 1944 and September 1945, continued 



intermittently during a year and a half without producing conclusive 
results and culminated in a comprehensive series of agreements on 
basic points on October 11, 1945, after Ambassador Hurley’s departure 
from China and before General Marshall’s arrival. Meanwhile, how- 
ever, clashes between the armed forces of the two groups were increas- 
ing and were jeopardizing the fulfillment of the agreements. The 
danger of wide-spread civil war, unless the negotiations could 
promptly be brought to a successful conclusion, was critical. It was 
under these circumstances that General Marshall left on his mission to 
China at the end of 1945. 

As the account of General Marshall’s mission and the subsequent 
years in chapters V and VI of the underlying record reveals, our 
policy at that time was inspired by the two objectives of bringing 
peace to China under conditions which would permit stable govern- 
ment and progress along democratic lines, and of assisting the Na- 
tional Government to establish its authority over as wide areas of 
China as possible. As the event proved, the first objective was unreal- 
izable because neither side desired it to succeed: the Communists 
because they refused to accept conditions which would weaken their 
freedom to proceed with what remained consistently their aim, the 
communization of all China; the Nationalists because they cherished 
the illusion, in spite of repeated advice to the contrary from our mili- 
tary representatives, that they could destroy the Communists by 
force of arms. 

The second objective of assisting the National Government, how- 
ever, we pursued vigorously from 1945 to 1949. The National Gov- 
ernment was the recognized government of a friendly power. Our 
friendship, and our right under international law alike, called for aid 
to the Government instead of to the Communists who were seeking to 
subvert and overthrow it. The extent of our aid to Nationalist China 
is set forth in detail in chapters V, VI, VII and VIII of the record and 
need not be repeated here. The National Government had in 1945, 
and maintained until the early fall of 1948, a marked superiority in 
manpower and armament over their rivals. Indeed during that 
period, thanks very largely to our aid in transporting, arming and 
supplying their forces, they extended their control over a large part 
of North China and Manchuria. By the time General Marshall left 
China at the beginning of 1947, the Nationalists were apparently at 
the very peak of their military successes and territorial expansion. 
The following year and a half revealed, however, that their seeming 
strength was illusory and that their victories were built on sand. 

The crisis had developed around Manchuria, traditional focus of 
Bussian and Japanese imperialism. On numerous occasions, Mar- 



shal Stalin had stated categorically that he expected the National 
Government to take over the occupation of Manchuria. In the truce 
agreement of January 10, 1946, the Chinese Communists agreed to 
the movement of Government troops into Manchuria for the purpose 
of restoring Chinese sovereignty over this area. In conformity with 
this understanding the United States transported sizable government 
armies to the ports of entry into Manchuria. Earlier the Soviet Army 
had expressed a desire to evacuate Manchuria in December 1945, but 
had remained an additional two or three months at the request of the 
Chinese Government. When the Russian troops did begin their 
evacuation, the National Government found itself with extended lines 
of communications, limited rolling stock and insufficient forces to 
take over the areas being evacuated in time to prevent the entry of 
Chinese Communist forces, who were already in occupation of the 
countryside. As the Communists entered, they obtained the large 
stocks of materiel from the Japanese Kwantung Army which the Rus- 
sians had conveniently “abandoned.” To meet this situation the 
National Government embarked on a series of military campaigns 
which expanded the line of its holdings to the Sungari River. Toward 
the end of these campaigns it also commenced hostilities within North 
China and succeeded in constricting the areas held by the Communists. 

In the spring of 1946 General Marshall attempted to restore peace. 
This effort lasted for months and during its course a seemingly end- 
less series of proposals and counterproposals were made which had 
little effect upon the course of military activities and produced no 
political settlement. During these negotiations General Marshall 
displayed limitless patience and tact and a willingness to try and 
then try again in order to reach agreement. Increasingly he became 
convinced, however, that twenty years of intermittent civil war be- 
tween the two factions, during which the leading figures had remained 
the same, had created such deep personal bitterness and such irrecon- 
cilable differences that no agreement was possible. The suspicions 
and the lack of confidence were beyond remedy. He became con- 
vinced that both parties were merely sparring for time, jockeying for 
military position and catering temporarily to what they believed to 
be American desires. General Marshall concluded that there was 
no hope of accomplishing the objectives of his mission. 

Even though for all practical purposes General Marshall, by the fall 
of 1946, had withdrawn from his efforts to assist in a peaceful settle- 
ment of the civil war, he remained in China until January 1947. One 
of the critical points of dispute between the Government and the 
Communists had been the convocation of the National Assembly to 
write a new constitution for China and to bring an end to the period 



of political tutelage and of one-party government. The Communists 
had refused to participate in the National Assembly unless there 
were a prior military settlement. The Generalissimo was determined 
that the Assembly should be held and the program carried out. It 
was the hope of General Marshall during the late months of 1946 
that his presence in China would encourage the liberal elements in 
non-Communist China to assert themselves more forcefully than they 
had in the past and to exercise a leavening influence upon the abso- 
lutist control wielded by the reactionaries and the militarists. General 
Marshall remained in China until the Assembly had completed its 
work. Even though the proposed new framework of government 
appeared satisfactory, the evidence suggested that there had been 
little shift in the balance of power. 

In his farewell statement, General Marshall announced the termina- 
tion of his efforts to assist the Chinese in restoring internal peace. He 
described the deep-seated mutual suspicion between the Kuomin- 
tang and the Chinese Communist Party as the greatest obstacle to a 
settlement. He made it clear that the salvation of China lay in the 
hands of the Chinese themselves and that, while the newly adopted 
constitution provided the framework for a democratic China, practical 
measures of implementation by both sides would be the decisive test. 
He appealed for the assumption of leadership by liberals in and out 
of the Government as the road to unity and peace. With these final 
words he returned to Washington to assume, in January 1947, his 
new post as Secretary of State. 

As the signs of impending disaster multiplied, the President in July 
1947, acting on the recommendation of the Secretary of State, in- 
structed Lt. Gen. Albert C. Wedemeyer to survey the Chinese scene 
and make recommendations. In his report, submitted on September 
19, 1947, the General recommended that the United States continue and 
expand its policy of giving aid to Nationalist China, subject to these 
stipulations : 

1. That China inform the United Nations of her request for aid. 

2. That China request the United Nations to bring about a truce in 
Manchuria and request that Manchuria be placed under a Five-Power 
guardianship or a trusteeship. 

3. That China utilize her own resources, reform her finances, her 
Government and her armies, and accept American advisers in the 
military and economic fields. 

General Wedemeyer’s report, which fully recognized the danger of 
Communist domination of all China and was sympathetic to the prob- 
lems of the National Government, nevertheless listed a large number 



of reforms which he considered essential if that Government were 
to rehabilitate itself. 

It was decided that the publication at that time of a suggestion for 
the alienation of a part of China from the control of the National 
Government, and for placing that part under an international ad- 
ministration to include Soviet Russia, would not be helpful. In this 
record, the full text of that part of General Wedemeyer’s report which 
deals with China appears as an annex to chapter VI. 

The reasons for the failures of the Chinese National Government 
appear in some detail in the attached record. They do not stem from 
any inadequacy of American aid. Our military observers on the spot 
have reported that the Nationalist armies did not lose a single battle 
during the crucial year of 1948 through lack of arms or ammunition. 
The fact was that the decay which our observers had detected in 
Chungking early in the war had fatally sapped the powers of resist- 
ance of the Kuomintang. Its leaders had proved incapable of meeting 
the crisis confronting them, its troops had lost the will to fight, and 
its Government had lost popular support. The Communists, on the 
other hand, through a ruthless discipline and fanatical zeal, attempted 
to sell themselves as guardians and liberators of the people. The 
Nationalist armies did not have to be defeated; they disintegrated. 
History has proved again and again that a regime without faith in 
itself and an army without morale cannot survive the test of battle. 

The record obviously can not set forth in equal detail the inner 
history and development of the Chinese Communist Party during these 
years. The principal reason is that, while we had regular diplomatic 
relations with the National Government and had the benefit of volu- 
minous reports from our representatives in their territories, our direct 
contact with the Communists was limited in the main to the mediation 
efforts of General Hurley and General Marshall. 

Fully recognizing that the heads of the Chinese Communist Party 
were ideologically affiliated with Moscow, our Government neverthe- 
less took the view, in the light of the existing balance of forces in 
China, that peace could be established only if certain conditions were 
met. The Kuomintang would have to set its own house in order and 
both sides would have to make concessions so that the Government of 
China might become, in fact as well as in name, the Government of all 
China and so that all parties might function within the constitutional 
system of the Government. Both internal peace and constitutional 
development required that the progress should be rapid from one 
party government with a large opposition party in armed rebellion, 
to the participation of all parties, including the moderate non-com- 
munist elements, in a truly national system of government. 



None of these conditions has been realized. The distrust of the 
leaders of both the Nationalist and Communist Parties for each other 
proved too deep-seated to permit final agreement, notwithstanding 
temporary truces and apparently promising negotiations. The Na- 
tionalists, furthermore, embarked in 1946 on an over-ambitious mili- 
tary campaign in the face of warnings by General Marshall that it 
not only would fail but would plunge China into economic chaos and 
eventually destroy the National Government. General Marshall 
pointed out that though Nationalist armies could, for a period, cap- 
ture Communist-held cities, they could not destroy the Communist 
armies. Thus every Nationalist advance would expose their commu- 
nications to attack by Communist guerrillas and compel them to retreat 
or to surrender their armies together with the munitions which the 
United States has furnished them. No estimate of a military situation 
has ever been more completely confirmed by the resulting facts. 

The historic policy of the United States of friendship and aid 
toward the people of China was, however, maintained in both peace 
and war. Since V-J Day, the United States Government has author- 
ized aid to Nationalist China in the form of grants and credits totaling 
approximately 2 billion dollars, an amount equivalent in value to 
more than 50 percent of the monetary expenditures of the Chinese 
Government and of proportionately greater magnitude in relation to 
the budget of that Government than the United States has provided 
to any nation of Western Europe since the end of the war. In addition 
to these grants and credits, the United States Government has sold 
the Chinese Government large quantities of military and civilian war 
surplus property with a total procurement cost of over 1 billion 
dollars, for which the agreed realization to the United States was 
232 million dollars. A large proportion of the military supplies fur- 
nished the Chinese armies by the United States since Y-J Day has, 
however, fallen into the hands of the Chinese Communists through the 
military ineptitude of the Nationalist leaders, their defections and 
surrenders, and the absence among their forces of the will to fight. 

It has been urged that relatively small amounts of additional aid — 
military and economic — to the National Government would have 
enabled it to destroy communism in China. The most trustworthy 
military, economic, and political information available to our Govern- 
ment does not bear out this view. 

A realistic appraisal of conditions in China, past and present, leads 
to the conclusion that the only alternative open to the United States 
was full-scale intervention in behalf of a Government which had lost 
the confidence of its own troops and its own people. Such inter- 
vention would have required the expenditure of even greater sums 



than have been fruitlessly spent thus far, the command of Nationalist 
armies by American officers, and the probable participation of Ameri- 
can armed forces — land, sea, and air — in the resulting war. Inter- 
vention of such a scope and magnitude would have been resented by 
the mass of the Chinese people, would have diametrically reversed 
our historic policy, and would have been condemned by the American 

It must be admitted frankly that the American policy of assisting 
the Chinese people in resisting domination by any foreign power or 
powers is now confronted with the gravest difficulties. The heart 
of China is in Communist hands. The Communist leaders have fore- 
sworn their Chinese heritage and have publicly announced their sub- 
servience to a foreign power, Russia, which during the last 50 years, 
under czars and Communists alike, has been most assiduous in its 
efforts to extend its control in the Far East. In the recent past, 
attempts at foreign domination have appeared quite clearly to the 
Chinese people as external aggression and as such have been bitterly 
and in the long run successfully resisted. Our aid and encouragement 
have helped them to resist. In this case, however, the foreign domina- 
tion has been masked behind the fagade of a vast crusading movement 
which apparently has seemed to many Chinese to be wholly indigenous 
and national. Under these circumstances, our aid has been unavailing. 

The unfortunate but inescapable fact is that the ominous result of 
the civil war in China was beyond the control of the government of 
the United States. Nothing that this country did or could have done 
within the reasonable limits of its capabilities could have changed that 
result; nothing that was left undone by this country has contributed 
to it. It was the product of internal Chinese forces, forces which this 
country tried to influence but could not. A decision was arrived at 
within China, if only a decision by default. 

And now it is abundantly clear that we must face the situation as 
it exists in fact. We will not help the Chinese or ourselves by basing 
our policy on wishful thinking. We continue to believe that, however 
tragic may be the immediate future of China and however ruthlessly 
a major portion of this great people may be exploited by a party in the 
interest of a foreign imperialism, ultimately the profound civilization 
and the democratic individualism of China will reassert themselves 
and she will throw off the foreign yoke. I consider that we should 
encourage all developments in China which now and in the future 
work toward this end. 

In the immediate future, however, the implementation of our his- 
toric policy of friendship for China must be profoundly affected by 
current developments. It will necessarily be influenced by the degree 



to which the Chinese people come to recognize that the Communist 
regime serves not their interests but those of Soviet Russia and the 
manner in which, having become aware of the facts, they react to this 
foreign domination. One point, however, is clear. Should the Com- 
munist regime lend itself to the aims of Soviet Russian imperialism 
and attempt to engage in aggression against China’s neighbors, we 
and the other members of the United Nations would be confronted by 
a situation violative of the principles of the United Nations Charter 
and threatening international peace and security. 

Meanwhile our policy will continue to be based upon our own respect 
for the Charter, our friendship for China, and our traditional support 
for the Open Door and for China’s independence and administrative 
and territorial integrity. 

Respectfully yours, 

Dean Acheson 



Letter of Transmittal hi 

Chronology of Principal Events Affecting Sino-American 
Relations xxxvn 


A Century of American Policy , 1844-1948 

I. Introduction 1 

II. Development of Basic American Policy 1 

Equality of Commercial Opportunity 1 

Enunciation of the Open Door Policy 2 

Early Efforts to Maintain the Open Door 3 

The Root-Takahira Agreement, 1908 5 

The Knox “Neutralization” Proposals, 1909 ... 5 

III. World War I and Post-War Settlements 6 

Hostilities in China 6 

The Twenty-one Demands, 1915 7 

The Lansing-Ishii Agreement, November 2, 1917 . . 8 

Settlement of the Shantung Question 9 

The Nine-Power Treaty, February 6, 1922 10 

IV. Non-Interference in Chinese Internal Affairs — The 

Washington Conference and After 10 

Statement by Secretary Kellogg, January 27, 1927 . 11 

Recognition of the National Government, 1928 ... 12 

V. The Sino-Soviet Dispute in 1929 12 

VI. Japanese Expansion into China from 1931 13 

The Non-Recognition Doctrine of Secretary Stimson . 13 

Defense of American Treaty Rights in China .... 15 

Statement by Secretary Hull, December 5, 1935 . . 17 

VII. The Japanese Undeclared War of 1937 18 

The “Quarantine” Speech of President Roosevelt, 

October 5, 1937 19 

Defense of the Principle of the Open Door 19 

Defense of Chinese Integrity 23 

United States Support of Chinese Resistance .... 24 

American-Japanese Informal Conversations in 1941 . . 25 





VIII. World War II 26 

The LeDd-Lease Program, 1941-1943 26 

Military Aid, 1941-1943 28 

Financial Aid, 1937-1943 31 

Relinquishment of American Extraterritoriality in 

China 34 

Repeal of Chinese Exclusion Acts, 1943 37 

American Acknowledgment of China as a Great 

Power 37 


A Review of Kuomintang-Chinese Communist Relations , 1921-1944 

I. Introduction 38 

II. Basic Factors 38 

The Kuomintang Program 38 

The Communist Program 40 

Foundation of the Communist Party, 1921 41 

Reorganization of the Kuomintang, 1924 42 

III. Kuomintang-Communist Collaboration, 1924-1927 . . 43 

IV. Civil War, 1927-1936 44 

V. The Kuomintang-Communist Entente, 1937—1944 ... 45 

Background of the Entente 45 

Third Plenary Session of the Kuomintang Central 

Executive Committee, 1937 48 

Manifesto of the Chinese Communist Party, Septem- 
ber 22, 1937 50 

Statement by Generalissimo Chiang Kai-shek, Sep- 
tember 23, 1937 51 

Implementation of the Agreements, 1937-1938 ... 51 

Deterioration of Kuomintang-Communist Relations, 

1938-1941 52 

Kuomintang-Communist Negotiations, 1941-1944 . . 53 

The Wallace Mission, 1944 55 

Conclusion 57 


The Ambassadorship of Major General Patrick J. Hurley , 

I. Immediate Background of the Hurley Mission .... 59 

Introduction 59 

Chinese Unity and the War Effort 61 



I. Immediate Background of the Hurley Mission — Con. 

Pessimism of Ambassador Gauss 64 

The Military Factor 65 

President Roosevelt's Messages to Generalissimo 

Chiang Kai-shek, July-August 1944 66 

Reports by General Stilwell 68 

General Hurley’s Instructions 71 

General Hurley’s Talk with Mr. Molotov 71 

II. The Effort at Mediation 73 

Initial Steps 73 

The Five-Point Draft Agreement, November 10, 1944 . 74 

The Three-Point Plan 75 

Reply of the Chinese Communists 75 

The Conference at Chungking 73 

The National Government's Proposal 78 

The Communist Party's Reaction 79 

Conference with the Generalissimo 80 

Summary of Kuomintang Views 81 

Adjournment of the Conference 82 

The Generalissimo’s Statement of March 1, 1945 . . 83 

The Communist Party’s Reply, March 9, 1945 ... 84 

III. The Problem of Military Assistance 86 

Ambassador Hurley’s Recommendation against Amer- 
ican Aid to the Chinese Communists 86 

The American Charge’s Recommendations 87 

IV. China and the Soviet Union 92 

Agenda for Dr. Soong’s Moscow Conversations ... 92 

Ambassador Hurley’s Interview with Marshal Stalin, 

April 15, 1945 94 

Comments on Ambassador Hurley’s Report .... 96 

Ambassador Hurley’s Review of Sovdet-Chinese 

Communist Relations 99 

V. Further Government-Communist Negotiations .... 100 

Sixth Kuomintang Congress, May 1945 100 

The Committee of Seven 102 

Ambassador Hurley's Departure 105 

Continuing Negotiations at Chungking 107 

Clashes between Communist and National Troops . . 110 

Postponement of the Political Consultative Con- 
ference no 

VT. The Resignation of Ambassador Hurley 112 




The Yalta Agreement and the Sino-Soviet Treaty of 1945 


I. The Yalta Agreement, February 11, 1945 113 

Text of the Agreement 113 

Discussions at Yalta 114 

Soviet Views on the Agreement 115 

II. The Sino-Soviet Treaty of Friendship and Alliance, Au- 
gust 14, 1945 116 

Negotiation of the Treaty 116 

Assurances on the Open Door 118 

Chinese Reaction to the Treaty 120 

United States Reaction to the Treaty 121 

Soviet Attitude Toward Manchurian Industries ... 123 

Discussions at the Moscow Conference, 1945 .... 124 

American Protests on Dairen 125 

Conclusion 126 


The Mission of General George C. Marshall , 1945-194-7 

I. The Economic, Military and Political Setting 127 

Introduction 127 

General Economic Situation Immediately afber V-J 

Day 127 

China’s Financial Position 129 

Unfavorable Elements 130 

General Wedemeyer’s Reports 131 

General Marshall’s Appointment and Instructions . . 132 

The President’s Policy Statement of December 15, 

1945 133 

The Beginning of the Marshall Mission 133 

Recapitulation of Chinese Political Background for the 

Mission 134 

II. The Agreements of January and February 1946 .... 136 

The Cease-Fire Agreement of January 10, 1946 . . . 136 

The Political Consultative Conference 138 

The PCC Resolutions 139 

The Military Reorganization Agreement of February 

25, 1946 140 

Chinese Public Reaction 143 

Kuomintang Action on the PCC Resolutions .... 144 

General Marshall’s Recall for Consultation 145 




III. The Manchurian Crisis 145 

Field Teams for Manchuria 145 

Chinese Communist Occupation of Changchun . . . 149 

General Marshall’s Appraisal of the Situation ... 150 

General Marshall’s Temporary Withdrawal from 

Mediation 152 

Suggested Compromise Solution 153 

National Government Capture of Changchun .... 155 

Generalissimo Chiang’s Proposals of May 24, 1946 . 156 

Arrangements for a Truce 158 

Negotiations during the Truce Period 159 

Cessation of Hostilities in Manchuria 162 

Revision of the Military Reorganization Agreement 

and Related Political Problems 162 

General Marshall’s Draft Agreement on the Army 

Reorganization Plan 166 

Disintegration of the Truce Arrangement 170 

IV. The Appointment of J. Leighton Stuart as Ambassa- 

dor to China 173 

V. Organization of the State Council 174 

Proposal for a Five-Man Committee 174 

The Marshall-Stuart Statement of August 10, 1946 . 175 

Generalissimo Chiang Kai-shek’s Position 177 

Major Factors of Disagreement 177 

VI. The Truman-Chiang Messages of August 1946 .... 179 

President Truman’s Message of August 10 179 

Generalissimo Chiang’s Reply of August 28 179 

President Truman’s Message of August 31 179 

VII. The Drift toward All-Out Strife 180 

Communist Resentment of American Aid to China . 180 

Problems Relating to the Five-Man Committee . . . 181 

Neither Side Yields Measurably 184 

National Government Military Activities 188 

Further Deterioration in the Negotiations 188 

General Marshall Considers Withdrawing 189 

The Kalgan Truce Proposal 193 

The Marshall-Stuart Statement of October 8, 1946 . . 194 

The Communist Position 194 

Generalissimo Chiang’s Statement of October 10, 1946 . 196 

The Fall of Kalgan and the Summoning of the National 

Assembly 196 

Draft Statement Prepared for the Generalissimo . . . 197 



VII. The Drift toward All-Out Strife — Continued 

Eight-Point Proposal by the Generalissimo, October 

16, 1946 198 

The Communist Reply 199 

The Spreading of Hostilities 200 

Attempt at Mediation by the Third Party Group . . 201 

Generalissimo Chiang's Statement of November 8, 

1946 204 

Cease-Fire Order by the National Government . . . 206 

Convening of the National Assembly, November 15, 

1946 207 

The End of American Mediation 208 

General Marshall's Views on the Situation in China . . 211 

The Work of the National Assembly 214 

The Communist Party's Reaction 215 

VIII. The End of the Marshall Mission 217 

General Marshall's Refusal to Continue as Mediator . 217 

General Marshall's Recall and Final Statement ... 217 

President Truman's Statement of December 18, 1946 . 218 

American Withdrawal from the Committee of Three 

and Executive Headquarters 219 

Conclusion 219 

IX. Economic Developments During the Marshall Mission . 220 

Effects of Internal Conflict 220 

Developments in China's Foreign Exchange and Trade 

Policies 222 

Effects of Restrictions on Trade and Shipping . . . 223 

Economic Treaty Relations 223 

Foreign Aid in 1946 225 


The Ambassadorship oj John Leighton Stuart , 19^7-19/^9 

I. The Political and Military Situation 230 

Further Efforts at Negotiation 230 

Reversal of Communist Policy 232 

The Soviet Proposal of March 10, 1947 233 

Reorganization of the Legislative Yuan and the Con- 
trol Yuan, March 1, 1947 233 

Ambassador Stuart's Summary of Developments . . . 235 

The Capture of Yenan 237 

Student Demonstrations 238 

Continued Deterioration of the Government's 

Position 240 



II. American Efforts to Encourage Reforms by the Chinese 

Government 242 

Ambassador Stuart’s Reports 242 

Reorganization of the Executive Yuan and State 

Council, April 17, 1947 244 

The Political Situation in Manchuria 247 

Chinese Moves toward Reform 249 

The Communists Proclaimed to Be in Open Rebellion, 

July 4, 1947 251 

Secretary Marshall’s Message of July 6, 1947 .... 251 

Ambassador Stuart’s Observations on North China 

and Manchuria 252 

III. The Wedemeyer Mission 255 

Introduction 255 

General Wedemeyer’s Instructions 255 

Chinese Reaction to the Appointment 256 

General Wedemeyer’s Statements of August 22 and 

24, 1947 256 

Chinese Reaction to General Wedemeyer’s State- 
ments 258 

Recommendations of the Wedemeyer Report .... 260 

IY. Internal Developments in China 261 

Fourth Plenary Session of the Kuomintang Central 

Executive Committee 261 

Ambassador Stuart’s Report of September 29, 1947 . . 263 

Outlawing of the Democratic League, October 28, 

1947 265 

Possibility of Resumption of Peace Negotiations . . . 265 

Elections to the National Assembly 268 

Disturbances in Shanghai 269 

V. Redefinition of American Policy 269 

Considerations Underlying the Formulation of a Pro- 
gram of Aid to China 269 

Secretary Marshall’s Press Conference of March 10, 

1948 • . . . 271 

President Truman’s Press Conference of March 11, 

1948 272 

VI. Changes in the Chinese Government 273 

Election of President Chiang and Vice President 

Li Tsung-jen 273 

The Search for a New Executive Yuan 274 

Student Riots 277 

Economic Reform Decrees of August 19, 1948 .... 278 




VII. Alternatives of American Policy 279 

Secretary Marshall’s Policy Directives of August 12 

and 13, 1948 279 

Policy Review of October 1948 280 

Chinese Requests for Further Military Assistance . . 286 

VIII. Chinese Developments in 1949 288 

President Chiang’s New Year’s Message 288 

Prime Minister Sun Fo’s New Year’s Message . . . 290 

Chinese Request for Foreign Mediation 290 

The Retirement of the Generalissimo 292 

The Position and Policies of Acting President Li . . 293 

IX. Renewed Consideration of Additional American Aid . . 299 

Recommendation from Tientsin 299 

Comments by the Embassy Office at Canton . . . 300 

Difficulties Confronting Acting President Li ... . 301 

X. The Withdrawal of the Government from Nanking . . 304 

The Communist Demands of April 15, 1949 .... 304 

The Crossing of the Yangtze 305 

XI. Formosa 307 


The Military Picture , 1945-1949 

I. Military Operations 311 

Operations in 1945 311 

Operations in 1946 313 

Operations in 1947 315 

Operations in 1948 and 1949 318 

II. American Operational Advice to the Chinese 323 

Directives to General Barr on Advisory Activities . 323 

General Barr’s Report 325 

III. American Advisory Groups in China 338 

Legislation and Agreements 338 

The Joint Advisory Staff 340 

The Naval Advisory Division 341 

The Air Advisory Division 342 

The Combined Service Forces Advisory Division . . 344 

The Ground Forces Advisory Division 345 

Comparison of Aid to China with Aid to Greece 351 



IV. Military Materiel and Services Provided the Chinese 

Government Since V-J Day 


Secretary Marshall's Testimony on the 1946 Em- 

American Equipment Captured by the Chinese Com- 

Adequacy of the Government's Military Supplies . . 


The Program of American Economic Aid, 1947 -1949 

I. The Economic Situation in 1947 

Internal Economic Factors 

Chinese Requests for American Aid 

Consideration of Export-Import Bank Credits .... 

Proposals for a Silver Loan 

The Mounting Economic Crisis in China 

II. Preparation in the United States of the China Aid Pro- 


Secretary Marshall's Recommendations to Congress . 
Premier Chang Chun's Request of November 17, 


The Chinese Request of November 21 and 24, 1947 . . 

Ambassador Stuart's Comments 

“Some Fundamental Considerations on American Aid 

to China" 

Washington Discussions with Chinese Representa- 

Premier Chang Chun's Statement of January 28, 


Presentation of the China Aid Program to Congress . . 

III. The China Aid Act of 1948 

IV. Implementation of the China Economic Aid Program . . 

Initiation of the Program . 

Undertakings by the Chinese Government 

Specific Economic Measures Recommended to China . 

Progress of the Economic Aid Program 

Continuation of Economic Aid Beyond April 3, 1949 . 
The Appraisal of Acting President Li 
























A Century of American Policy , 1844-1 948 


1. Treaty Between the United States and China, July 3, 1844, Article II . 413 

2. Treaty Between the United States and China, June 18, 1858, Article 

XXX 413 

3. Treaty Between the United States and China, July 28, 1868, Article 

VI 414 

4. The Open Door Notes: September 6, 1899; March 20, 1900 414 

5. Secretary Hay to Certain American Diplomatic Representatives, July 

3, 1900 416 

6. Treaty Between the United States and China, October 8, 1903 .... 417 

7. Secretary Hay to Certain American Diplomatic Representatives, Feb- 

ruary 10, 1904 426 

8. Secretary Hay to Certain American Diplomatic Representatives, Jan- 

uary 13, 1905 426 

9. Root-Takahira Agreement, November 30, 1908 427 

10. Memorandum by Secretary Knox on Neutralization of the Manchurian 

Railways, November 6, 1909 428 

11. Secretary Bryan to the Japanese Ambassador, March 13, 1915 .... 430 

12. Secretary Bryan to the Ambassador in Japan, May 11, 1915 436 

13. Lansing-Ishii Agreement, November 2, 1917 437 

14. Treaty Between the United States and Other Powers, February 6, 1922. 438 

15. Statement by Secretary Kellogg, January 27, 1927 442 

16. Treaty Between the United States and China, July 25, 1928 445 

17. Secretary Stimson to the Ambassador in Japan, January 7, 1932 . . . 446 

18. Secretary Stimson to the Chairman of the Senate Committee on Foreign 

Relations, February 23, 1932 447 

19. Statement by Secretary Hull, December 5, 1935 450 

20. Press Release Issued by the Department of State, October 6, 1937 . . . 451 

21. The Ambassador in Japan to the Japanese Piime Minister and Foreign 

Minister, October 6, 1938 452 

22. The Japanese Foreign Minister to the Ambassador in Japan, November 

18, 1938 456 

23. The Ambassador in Japan to the Japanese Foreign Minister, December 

30, 1938 459 

24. Statement by Secretary Hull, March 30, 1940 463 

25. Document Handed by Secretary Hull to the Japanese Ambassador, 

November 26, 1941 464 

26. Master Lend-Lease Agreement Between the United States and China, 

June 2, 1942 466 

27. (a) Secretary of War Stimson to the Chinese Minister for Foreign 

Affairs, January 29, 1942 468 

(b) The Chinese Minister for Foreign Affairs to Secretary of War 

Stimson, January 30, 1942 469 





28. Five Hundred Million Dollar Financial Aid of 1942 and Other War- 

time Financial Relationships (28(a)-28(ii)) 470 

29. (a) President Roosevelt to Generalissimo Chiang Kai-shek, February 

7, 1942 510 

(b) Joint Statement by Secretary of the Treasury Morgenthau and 
Dr. T. V. Soong, Chinese Minister for Foreign Affairs, March 21, 

1942 510 

30. Statement by Acting Secretary Welles, July 19, 1940 512 

31. Secretary Hull to the Appointed Chinese Minister for Foreign Affairs, 

May 31, 1941 513 

32. Treaty Between the United States and China, January 11, 1943 . . . 514 

33. Statement on Conference of President Roosevelt, Generalissimo Chiang 

Kai-shek, and Prime Minister Churchill, Cairo, December 1, 1943 . 519 


A Review of Kuomintang-Chinese Communist Relations t 1921-1944 

34. Manifesto on the Seizure of Generalissimo Chiang Kai-shek, December 

12, 1936 521 

35. The Central Committee of the Chinese Communist Party to the Third 

Plenary Session of the Fifth Central Executive Committee of the 
Kuomintang, February 10, 1937 522 

36. Manifesto on Unity by the Central Committee of the Chinese Com- 

munist Party, September 22, 1937 523 

37. Statement by Generalissimo Chiang Kai-shek, September 23, 1937 . . 524 

38. Message of Generalissimo Chiang Kai-shek to the People’s Political 

Council, March 6, 1941 526 

39. Statement by Generalissimo Chiang Kai-shek, September 13, 1943 . . 530 

40. Report by the Representative of the National Government to the 

People’s Political Council, September 15, 1944 531 

41. Report by the Representative of the Central Committee of the Chinese 

Communist Party to the People’s Political Council, September 15, 

1944 544 

42. Statement by the Chinese Minister of Information, September 20, 

1944 549 

43. Summary Notes of Conversations Between Vice President Henry A. 

Wallace and President Chiang Kai-shek, June, 1944 549 

44. President Roosevelt to President Chiang Kai-shek, July 14, 1944 . . 560 

chapter m 

The Ambassadorship of Major General Patrick J . Hurley , 1944-1945 

45. The Ambassador in China to Secretary Hull, August 31, 1944 .... 561 

46. Secretary Hull to the Ambassador in China, September 9, 1944 . . . 563 

47. Memoranda by Foreign Service Officers in China, 1943-1945 .... 564 

48. (a) The Vice Chairman of the Central Committee of the Chinese 

Communist Party to the Ambassador in China, February 18, 

1945 576 

(b) The Ambassador in China to the Vice Chairman of the Central 
Committee of the Chinese Communist Party, February 20, 

1945 577 




49. Summary of Conversations between Representatives of the National 

Government and of the Chinese Communist Party, October 11, 

1945 577 

50. The Ambassador to China to President Truman, November 26, 1945 . 581 


The Yalta Agreement and the Sino-Soviet Treaty of 1945 

51. Treaty of Friendship and Alliance Between China and the U.S.S.R., 

August 14, 1945 585 

52. Exchange of Notes Relating to the Treaty of Friendship and Alliance, 

August 14, 1945 587 

53. Exchange of Notes on Outer Mongolia, August 14, 1945 588 

54. Agreement Between China and the U.S.S.R. Concerning Dairen . . . 589 

55. Protocol to the Agreement on Dairen 589 

56. Agreement Between China and the U.S.S.R. on Port Arthur, August 14, 

1945 590 

57. Appendix to Agreement on Port Arthur, August 14, 1945 591 

58. Agreement Between China and the U.S.S.R. on Relations Between the 

Chinese Administration and Commander-in-Chief of Soviet Forces 
after Entry into the “Three Eastern Provinces” 592 

59. Agreement Between China and the U.S.S.R. on the Chinese Changchun 

Railway, August 14, 1945 593 

60. Red Army “War Booty” Removals from Manchuria (60(a)-60(c)) . . 596 

chapter v 

The Mission of General George C. Marshall , 19 45-19 47 

61. President Truman to the Special Representative of the President, 

December 15, 1945 605 

62. Statement by President Truman on United States Policy toward China, 

December 15, 1945 607 

63. Press Release on Order for Cessation of Hostilities, January 10, 1946 . 609 

64. Resolution on Government Organization Adopted by the Political Con- 

sultative Conference, January, 1946 610 

65. Resolution on Program for Peaceful National Reconstruction Adopted 

by the Political Consultative Conference, January, 1946 612 

66. Resolution on Military Problems Adopted by the Political Consultative 

Conference, January 1946 617 

67. Agreement on the National Assembly by Sub-Committee of the Polit- 

ical Consultative Conference 619 

68. Resolution on the Draft 1936 Constitution Adopted by the Political 

Consultative Conference, January, 1946 619 

69. Press Release by Military Sub-Committee Concerning Agreement on 

Military Reorganization, February 25, 1946 622 

70. Memorandum by the Military Sub-Committee, March 16, 1946 . . . 626 

71. (a) Agreement on Establishment of the Executive Headquarters, 

January 10, 1946 627 

(b) The Committee of Three to Generalissimo Chiang Kai-shek, 

January 10, 1946 629 

(c) Memorandum on Operations of the Executive Headquarters . . . 629 

(d) Memorandum Concerning Repatriation of Japanese 632 



72. Ratification by Central Executive Committee of the Kuomintang of 

Resolutions Adopted by Political Consultative Conference, March 
16, 1946 

73. Memorandum by the Chairman of the Committee of Three, January 

24, 1946 

74. The Committee of Three to the Executive Headquarters, March 27, 


75. The Committee of Three to the Three Commissioners of Executive 

Headquarters, May 14, 1946 

76. (a) Statement by Generalissimo Chiang Kai-shek, June 6, 1946 . . . 
(b) Statement by Vice Chairman of the Central Committee of the 

Chinese Communist Party, June 6, 1946 

77. Directive by the Committee of Three for Reopening Comimmication 

Lines in North and Central China, June, 1946 

78. Agreement by the Committee of Three, June 24, 1946 

79. The Committee of Three to the Three Commissioners of Executive 

Headquarters [June 26?] 1946 

80. Preliminary Agreement Proposed by the Chairman of the Committee 

of Three, June, 1946 

81. Manchuria Annex to Preliminary Agreement Proposed by Chairman 

of the Committee of Three, June, 1946 

82. Radio Message by Generalissimo Chiang Kai-shek, July 1, 1946 . . 

83. Joint Statement by Mao Tse-tung and General Chu Teh, July 1, 


84. Joint Statement by the Special Representative of the President and 

the Ambassador in China, August 10, 1946 

85. Statement by President Chiang Kai-shek, August 13, 1946 

86. President Truman to President Chiang Kai-shek, August 10, 1946 . . . 

87. The Chinese Ambassador to President Truman, August 28, 1946. . . 

88. President Truman to President Chiang Kai-shek, August 31, 1946 . . . 

89. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, September 15, 1946 

90. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, September 16, 1946 

91. The Special Representative of the President to the Head of the 

Chinese Communist Party Delegation, September 19, 1946 .... 

92. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, September 21, 1946 

93. The Special Representative of the President and the Ambassador in 

China to the Head of the Chinese Communist Party Delegation, 
September 26, 1946 

94. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President and the Ambassador in China, 
September 27, 1946 

95. Draft of Statement for Generalissimo Chiang Kai-shek, September 


96. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, September 30, 1946 

97. The Special Representative of the President to President Chiang Kai-shek, 

October 1, 1946. 





























98. President Chiang Kai-shek to the Special Representative of the Presi- 

dent, October 2, 1946 663 

99. The Special Representative of the President to the Ambassador in 

China, October 6, 1946 664 

100. Statement by the Chinese Communist Party, October 8, 1946 . . . 665 

101. Joint Statement by the Special Representative of the President and 

the Ambassador in China, October 8, 1946 665 

102. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, October 9, 1946 667 

103. Address Delivered by President Chiang Kai-shek at Nanking, October 

10, 1946 669 

104. Draft of Statement for Generalissimo Chiang Kai-shek, October 14, 

1946 673 

105. Statement by Generalissimo Chiang Kai-shek, October 16, 1946 . . 674 

106. Proposals by the Third Party Group, October, 1946 675 

107. Draft of Statement for Generalissimo Chiang Kai-shek, November 7, 

1946 676 

108. Statement by Generalissimo Chiang Kai-shek, November 8, 1946 . . 677 

109. The Head of the Chinese Communist Party Delegation to the Special 

Representative of the President, November 8, 1946 678 

110. Address Delivered by President Chiang Kai-shek at Nanking, Novem- 

ber 15, 1946 679 

111. Statement by the Head of the Chinese Communist Party Delegation, 

November 16, 1946 683 

112. The Representative of the Chinese Communist Party to the Special 

Representative of the President, December 4, 1946 685 

113. Personal Statement by the Special Representative of the President, 

January 7, 1947 686 

114. Statement by President Truman on United States Policy Toward 

China, December 18, 1946 689 

115. Press Release Issued by the Department of State, January 29, 1947 . 695 


The Ambassadorship of John Leighton Stuart , 19^7-19^9 

116. (a) Statement Issued by the Ministry of Information, Chinese 

National Government, January 20, 1947 697 

(b) Statement by the Chief of the Department of Information, Cen- 

tral Committee, Chinese Communist Party, January 29, 1947 . 699 

(c) Statement Issued by the Ministry of Information, Chinese 

National Government, January 29, 1947 703 

(d) Statement by Generalissimo Chiang Kai-shek, February 16, 1947 . 704 

117. Radio Speech by the Vice Chairman of the Central Committee of the 

Chinese Communist Party, January 10, 1947 706 

118. Memorandum by the Chief of the Department of Information, Cen- 

tral Committee, Chinese Communist Party, Concerning Postwar 
International Situation, January, 1947 710 

119. Statement of the Central Committee of the Chinese Communist 

Party, February 1, 1947 719 

120. Article by the Chairman of the Central Committee of the Chinese 

Communist Party Commemorating 28th Anniversary of the Party, 

June 30, 1949 720 




121. The Ambassador in China to Secretary Marshall, May 20, 1947 . . 729 

122. The Ambassador in China to Secretary Marshall, June 4, 1947 . . 731 

123. The Ambassador in China to Secretary Marshall, May 30, 1947 . . 732 

124. The Ambassador in China to Secretary Marshall, July 1, 1947 . . . 732 

125. The Ambassador in China to Secretary Marshall, April 5, 1947 . . 735 

126. Summary of Manifesto Issued by Central Executive Committee of 

the Kuomintang, March 24, 1947 • 737 

127. (a) Statement by President ‘ Chiang Kai-shek announcing Reorgan- 

ization of the State Council, April 18, 1947 739 

(b) Text of the Political Program of the National Government of 

China, April 17, 1947 740 

(c) Statement by the Minister of Information, Chinese National 

Government, April 23, 1947 741 

(d) Inaugural Radio Speech by the President of the Executive Yuan, 

April 23, 1947 742 

128. The Ambassador in China to Secretary Marshall, April 19, 1947 . . 744 

129. The Ambassador in China to Secretary Marshall, July 5, 1947 . . . 746 

130. Central News Agency Bulletin of July 5, 1947, Concerning Declara- 

tion by President of the Executive Yuan on Restoration of National 
Unity 748 

131. Radio Broadcast by President Chiang Kai-shek, July 7, 1947 ... 749 

132. The Ambassador in China to Secretary Marshall, July 21, 1947 . . 756 

133. Summary of Remarks Made by Lieutenant General Albert C. Wede- 

meyer Before a Joint Meeting of the State Council and All Ministers 
of the National Government, August 22, 1947 758 

134. Statement by Lieutenant General Albert C. Wedemeyer on Conclusion 

of Mission in China, August 24, 1947 763 

135. Report to President Truman by Lieutenant General Albert C. Wede- 

meyer, September 19, 1947 764 

136. The Consul General at Shanghai to Secretary Marshall, September 2, 

1947 815 

137. The Ambassador in China to Secretary Marshall, August 30, 1947 . 816 

138. Memorandum from the Chinese Government to Lieutenant General 

Albert C. Wedemeyer, September 6, 1947 817 

139. The Ambassador in China to Secretary Marshall, August 11, 1947 . 822 

140. The Ambassador in China to Secretary Marshall, August 19, 1947 . 823 

141. The Ambassador in China to Secretary Marshall, August 26, 1947 . 824 

142. The Ambassador in China to Secretary Marshall, September 17, 1947 . 826 

143. The Ambassador in China to Secretary Marshall, September 20, 

1947 828 

144. The Ambassador in China to Secretary Marshall, September 20, 

1947 830 

145. The Ambassador in China to Secretary Marshall, October 29, 1947 . 832 

146. Article Published in Central News Agency Bulletin, October 28, 1947 . 834 

147. Announcement by the China Democratic League, November 6, 1947 . 834 

148. The Ambassador in China to Secretary Marshall, November 5, 1947 . 836 

149. The Ambassador in China to Secretary Marshall, January 9, 1948 . . 840 

150. (a) The Ambassador in China to Secretary Marshall, February 5, 

1948 841 

(b) The Ambassador in China to Secretary Marshall, February 6, 

1948 843 

844538 — 49 3 




151. (a) The Ambassador in China to Secretary Marshall, March 17, 

1948 844 

(b) The Ambassador in China to Secretary Marshall, March 31, 

1948 845 

152. (a) The Ambassador in China to Secretary Marshall, April 2, 1948 . 846 

(b) Speech by Generalissimo Chiang Kai-shek Before the Central 

Executive Committee of the Kuomintang, April 4, 1948 . . . 847 

(c) The Ambassador in China to Secretary Marshall, April 5, 1948 . 849 

(d) The Ambassador in China to Secretary Marshall, April 6, 1948 . 849 

(e) The Ambassador in China to Secretary Marshall, April 19, 

1948 850 

(f) The Ambassador in China to Secretary Marshall, April 23, 

1948 851 

(g) The Ambassador in China to Secretary Marshall, April 23, 

1948 851 

(h) The Ambassador in China to Secretary Marshall, April 25, 

1948 852 

(i) The Ambassador in China to Secretary Marshall, April 26, 

1948 853 

(j) The Ambassador in China to Secretary Marshall, April 27, 

1948 854 

(k) The Consul General at Shanghai to Secretary Marshall, April 27, 

1948 855 

(l) The Ambassador in China to Secretary Marshall, April 29, 

1948 . 856 

(m) The Ambassador in China to Secretary Marshall, May 3, 1948 . 857 

(n) Editorial from the New China News Agency, May 24, 30, 

1948 859 

153. (a) The Ambassador in China to Secretary Marshall [May?] 

1948 864 

(b) The Ambassador in China to Secretary Marshall, May 19, 

1948 865 

(c) The Ambassador in China to Secretary Marshall, May 22, 

1948 866 

(d) The Ambassador in China to Secretary Marshall, May 24, 

1948 867 

(e) The Ambassador in China to Secretary Marshall, June 23, 

1948 868 

154. The Ambassador in China to Secretary Marshall, June 5, 1948 . . . 869 

155. The Ambassador in China to Secretary Marshall, August 20, 1948 . 871 

156. (a) The Consul at Shanghai to Secretary Marshall, June 24, 

1948 872 

(b) The Ambassador in China to Secretary Marshall, July 6, 

1948 872 

(c) The Consul General at Tientsin to Secretary Marshall, July 14, 

1948 874 

(d) The Ambassador in China to Secretary Marshall, July 17, 1948 . 875 




157. (a) The Ambassador in China to Secretary Marshall, August 23, 

1948 877 

(b) Secretary Marshall to the Chinese Minister for Foreign Affairs, 

August 28, 1948 878 

(c) The Ambassador in China to Secretary Marshall, October 15, 

1948 879 

158. The Consul General at Shanghai to Secretary Marshall, November 2, 

1948 880 

159. Editorial from the “Chung Yang Jih Pao,” November 4, 1948 . . . 880 

160. The Ambassador in China to Secretary Marshall, November 1, 1948 . 882 

161. The Ambassador in China to Secretary Marshall, August 10, 1948 . . 885 

162. (a) Secretary Marshall to Under Secretary Lovett, Paris, November 

6, 1948 887 

(b) Secretary Marshall to Under Secretary Lovett, Paris, November 

8, 1948 887 

163. President Chiang Kai-shek to President Truman, November 9, 1948 . 888 

164. President Truman to President Chiang Kai-shek, November 12, 1948. 889 

165. (a) The Ambassador in China to Secretary Marshall, November 5, 

1948 890 

(b) The Ambassador in China to Secretary Marshall, November 6, 

1948 894 

(c) The Consul General at Shanghai to Secretary Marshall, Novem- 

ber 29, 1948 894 

(d) The Ambassador in China to Secretary Marshall, December 16, 

1948 895 

(e) The Ambassador in China to Secretary Marshall, December 19, 

1948 896 

(f) The Ambassador in China to Secretary Marshall, December 21, 

1948 897 

(g) The Ambassador in China to Secretary Marshall, December 29, 

1948 899 

(h) The Ambassador in China to Secretary Marshall, December 30, 

1948 900 

166. A Series of Chronicle Summaries by the American Embassy in 

Nanking to the Department of State during 1948 901 

167. New Year Message, 1949, of President Chiang Kai-shek 920 

168. The Chinese Minister for Foreign Affairs to the Ambassador in China, 

January 8, 1949 922 

169. Memorandum on the Situation in Taiwan, April 18, 1947 923 


The Military Picture , 1945-1949 

170. Oral Statement by President Truman to Dr. T. V. Soong Concerning 

Assistance to China, September 14, 1945 939 

171. Study of American Military Mat4riel and Services Provided to the 

Chinese National Government since V-J Day (September 2, 1945) . 940 

172. Categories of American Military Aid Extended to China Since V-J 

Day (September 2, 1945) 969 




173. Transfer and Sale of Ammunition and Materiel to the Chinese Na- 

tional Government During 1947 and 1948 974 

174. Statement Submitted by Brigadier General T. S. Timberman to the 

Committee on Foreign Affairs of the House of Representatives, June 
21, 1949 975 


The Program of American Economic Aid , 1947-1949 

175. (a) Message from President Truman on Aid to China, February 18, 

1948 981 

(b) Statement by Secretary Marshall Regarding the China Aid Pro- 
gram, February 20, 1948 983 

176. Statement Issued by the Ambassador in China, February 20, 1948 . 985 

177. Statement by the Department of State, the Department of the Treas- 

ury, and the Federal Reserve Board on Possible Use of Silver for 
Monetary Stabilization in China in Connection With China Aid Pro- 
gram [February 1948] 987 

178. (a) Secretary Marshall to the Ambassador in China, January 12, 

1948 989 

(b) Secretary Marshall to the Ambassador in China, May 7, 1948 . . 990 

179. Text of China Aid Act of 1948, April 3, 1948 991 

180. The Ambassador in China to Secretary Marshall, May 10, 1948 . . . 993 

181. Text of Economic Aid Agreement Between the United States and 

China, July 3, 1948 994 

182. Informal Memorandum Regarding Basic Reforms, Handed by Am- 

bassador Stuart to President Chiang Kai-shek, May 22, 1948 . . . 1001 

183. Exchange of Notes Between the United States and China Providing 

for Establishment of a Sino-American Joint Commission on Rural 
Reconstruction, August 5, 1948 1004 

184. Economic Aid to China Under the China Aid Act of 1948, February 

1949 1006 

185. Summary of United States Government Economic, Financial, and 

Military Aid to China Since 1937, Issued March 21, 1949 .... 1042 

186. Secretary Acheson to Senator Tom Connally, Chairman of the Senate 

Committee on Foreign Relations, March 15, 1949 1053 

Chronology of Principal Events Affecting 
Sino-American Relations 

July 3 

Treaty of Wanghia, first Sino-U.S. treaty (Cushing Treaty) 

June 18 

Treaty of Tientsin (Reed Treaty) 

July 28 

Treaty of Washington (Burlingame Treaty) 


Sept.- Mar. 

Secretary Hay’s Open Door notes 

July 3 

U.S. policy on preservation of Chinese territorial and admin- 
istrative entity announced 

Oct. 8 

Sino-U.S. Commercial Treaty signed at Shanghai 

Sept. 5 

Treaty of Portsmouth, ending Russo-Japanese War 

Nov. 30 

Root-Takahira Agreement 



Knox “neutralization” of Manchurian railways proposal 

Oct. 10 

Start of Chinese Revolution 

Feb. 12 

Abdication of Manchu dynasty and establishment of Chinese 

Mar. 13 

Secretary Bryan’s statement of opposition to Japanese 
Twenty-One Demands on China 

May 11 

Secretary Bryan’s statement of nonrecognition of Sino- 
Japanese agreements impairing American treaty rights in 

Aug. 14 
Nov. 2 

Chinese declaration of war against Germany 
Lansing-Ishii Agreement 






Foundation meeting of Chinese Communist Party held at 

Feb. 6 

Nine-Power Treaty signed at Washington Conference 

Jan. 27 

Secretary Kellogg’s statement expressing sympathy with 
Chinese nationalism and U.S. policy of noninterference in 
Chinese internal affairs 


Development of Kuomintang-Communist breach 

June 8 
July 6 

Peking taken by Nationalist forces led by Yen Hsi-shan 
Unification of China under Kuomintang announced by Chiang 

July 25 

U.S. recognition of the National Government of the Republic 
of China 

Sept. 18 

Beginning of Japanese conquest of Manchuria 

Jan. 7 

Secretary Stimson’s announcement of policy of nonrecogni- 
tion of territorial changes brought about by force 

Feb. 23 

Secretary Stimson’s letter to Senator Borah outlining U.S. 
policy in the Sino-Japanese dispute 

Apr. 29 
July 7 

U.S., in note to Japan, reasserted its treaty rights in China 
U.S. protest to Japan regarding the creation of a petroleum 
monopoly in Manchuria 

May 5 
Dec. 12 

Draft Chinese Constitution promulgated 

Generalissimo Chiang Kai-shek “arrested” by Chang Hsueh- 

Dec. 25 

liang at Sian, Shensi 

Generalissimo Chiang released from Sian “captivity” 

July 7 
Sept. 22 

Start of Japan’s undeclared war on China 
Manifesto of Central Committee of Communist Party re- 
garding formation of “united front” with Kuomintang 

Sept. 23 

Statement by Generalissimo Chiang Kai-shek welcoming 

Oct. 5 
Nov. 3-24 

President Roosevelt’s “quarantine” speech in Chicago 
Brussels Conference convened in virtue of article VII of 
Nine-Power Treaty of 1922 

Oct. 6 

U.S. protest regarding Japanese nonobservance of the Open 
Door in China 

July 26 

U.S. gave notice of termination of Japan-U.S. Commercial 
Treaty of Feb. 21, 1911 



Mar. 30 

May 6 

July 26 
Dec. 7 
Dec. 8 

U.S. denounced setting up of Wang Ching-wei regime in 

China declared eligible by President Roosevelt for lend-lease 

United States froze Japanese assets in United States 
Japanese attack upon Pearl Harbor 
U.S. declaration of war against Japan 


Jan. 29-30 

Feb. 2 

Feb. 7 
Mar. 6 

Soong-Stimson exchange of notes regarding appointment of 
General Stilwell as Chief of Staff of Generalissimo Chiang’s 
Joint Staff, and United States Army Representative in 

Letter orders issued by General Marshall ordering General 
Stilwell to Chungking to serve under Supreme Command 
of Generalissimo Chiang 
U.S. loan to China of $500,000,000 authorized 
General Stilwell reported to Generalissimo Chiang 

Jan. 11 

Oct. 30 

Nov. 22-26 
Nov. 28- 
Dec. 1 
Dec. 1 
Dec. 17 

Aug. 18 

Aug. 31 
Oct. 24 

Jan. 8 

Feb. 4^11 
Feb. 11 
Apr. 15 

May 8 
July 17- 
Aug. 1 
July 26 

Aug. 9 
Aug. 14 

Sino-U.S. treaty providing for relinquishment of American 
extraterritoriality signed at Washington 
Declaration of Four Nations on General Security signed by 
U.K., U.S., U.S.S.R. and China at Moscow 
Cairo Conference of Roosevelt, Churchill and Chiang Kai-shek 
Tehran Conference of Roosevelt, Churchill and Stalin 

Cairo Declaration issued by U.S., U.K. and China 
Repeal by U.S. Congress of discriminatory legislation re- 
garding Chinese immigration and naturalization 

Vice President Henry A. Wallace’s mission to China 
General Patrick J. Hurley appointed Personal Representative 
of President Roosevelt to China 
General Hurley’s conversation with Molotov in Moscow 
Recall of General Stilwell from China announced 

General Hurley presented credentials as American Ambassador 
to China to Generalissimo Chiang Kai-shek 
Yalta Conference of Roosevelt, Churchill and Stalin 
Yalta Agreement signed by Roosevelt, Churchill and Stalin 
Ambassador Hurley conferred with Stalin and Molotov at 
Moscow regarding settlement of Kuomintang-Communist 
V-E Day 

Berlin Conference of U.S., U.K. and U.S.S.R. 

Potsdam Declaration calling upon Japan to surrender un- 
conditionally issued by U.S., U.K., and China 
Soviet Union entered war against Japan 
Surrender of Japan 



Aug. 14 

Oct. 11 

Nov. 27 
Nov. 27 

Dec. 15 

Dec. 16-27 

Jan. 7 
Jan. 10 

Jan. 10-31 
Jan. 13 
Jan. 14 
Jan. 31 
Feb. 25 

Mar. 1-17 
Mar. 11 
Apr. 18 
Apr. 18 
May 5 
May 19 
May 23 
June 7 
June 27 
June 30 
July 11 

July 29 
Aug. 10 

Aug. 30 
Oct. 11 
Nov. 2 

Nov. 15- 
Dec. 25 
Dec. 18 

Jan. 6 
Jan. 7 

Jan. 29 

Sino-Soviet Treaty of Friendship and Alliance and related 
agreements signed at Moscow 

Summary of National Government-Communist conversations 

Resignation of Ambassador Hurley announced 
Appointment of Gen. George C. Marshall as President 
Truman’s Special Representative to China announced 
Statement of United States policy on China issued by Presi- 
dent Truman 

Moscow Conference of Foreign Ministers of U.S., U.K., and 

First meeting of the Committee of Three 
Committee of Three agreement regarding cessation of hos- 

Meeting of the Political Consultative Conference 
Effective date of the cessation-of-hostilities agreement 
Executive Headquarters at Peiping began official functions 
Resolutions adopted by Political Consultative Conference 
Agreement reached on basic plan for military reorganization 
and integration of Communist forces into the National 

Meeting of the Kuomintang Central Executive Committee 
General Marshall left China for U.S. to report to the President 
General Marshall returned to China 
Occupation of Changchun by Chinese Communist forces 
Transfer of National Government from Chungking to Nanking 
Occupation of Ssupingchieh by National Government troops 
Occupation of Changchun by National Government troops 
Beginning of truce period in Manchuria 

Joint China-U.S. Agricultural Mission commenced operations 
Expiration of the truce; negotiations at an apparent stalemate 
Senate confirmation of J. Leighton Stuart as American 
Ambassador to China 

Communist ambush of U.S. Marine convoy near Peiping 
Joint statement on situation in China issued by General 
Marshall and Ambassador Stuart 
Conclusion of Sino-American surplus-property sale agreement 
Occupation of Kalgan by National Government troops 
Sino-U. S. Treaty of Friendship, Commerce and Navigation 
signed at Nanking 

Meeting of the National Assembly to adopt a Constitution 

Statement by President Truman of American policy toward 

General Marshall's recall announced 

General Marshall’s nomination as Secretary of State an- 

U. S. announced termination of its connection with the Com- 
mittee of Three and Executive Headquarters 



Feb. 11 

Feb. 28 
Mar. 1 

Mar. 19 
Apr. 17 

June 30 

July 9 

Aug. 24 
Sept. 9 

Sept. 19 
Oct. 28 

Mar. 12 
Mar. 29 
Apr. 3 
July 3 

Aug. 5 

Aug. 19 
Sept. 23-24 
Oct. 15 
Oct. 20 
Nov. 1 
Dec. 1 
Dec. 31 

Jan. 1 

Jan. 8 
Jan. 12 
Jan. 15 
Jan. 21 

Jan. 31 
Feb. 5 
Mar. 12 
Mar. 24 
Apr. 14 
Apr. 20 
May 16-17 
May 25 
June 2 
June 3 

Chinese Government notified Communist delegation in Nan- 
king that its presence was no longer desired 
Uprising in Taiwan 

Reorganization of the Legislative Yuan and the Control Yuan 

Occupation of Yenan by National Government troops 
Reorganization of the Executive Yuan and the State Council 

Extraordinary meeting of the Standing Committee of the 
Kuomintang Central Executive Committee 
President Truman instructed General Wedemeyer to proceed 
to China on a fact-finding mission 
General Wedemeyer’ s statement on his departure from China 
Fourth Plenary Session of the Kuomintang Central Executive 
Committee opened 

General Wedemeyer submitted his report to the President 
The Democratic League outlawed 

Occupation of Ssupingchieh by Chinese Communist forces 
Meeting of the National Assembly 
China Aid Act of 1948 approved by President Truman 
Agreement signed covering terms of American economic aid 
to China 

Exchange of notes providing for establishment of Sino-Ameri- 
can Joint Commission on Rural Reconstruction in China 
Economic reform decrees issued by National Government 
Occupation of Tsinan by Chinese Communist forces 
Occupation of Chinchow by Chinese Communist forces 
Occupation of Changchun by Chinese Communist forces 
Occupation of Mukden by Chinese Communist forces 
Occupation of Hsuchow by Chinese Communist forces 
Formation of Sun Fo’s cabinet 

New Year’s messages by Generalissimo Chiang Kai-shek and 
Prime Minister Sun 

Chinese request for Big Four mediation 
U.S. declination to act as an intermediary 
Occupation of Tientsin by Chinese Communist forces 
Chiang Kai-shek announced his decision to retire; Li Tsung- 
jen became Acting President 
Occupation of Peiping by Chinese Communist forces 
Most of the Chinese Government’s offices moved to Canton 
Ho Ying-chin became Prime Minister in Canton 
Occupation of Taiyuan by Chinese Communist forces 
Extension of China Aid Act of 1948 
Crossing of Yangtze River by Communist forces 
Occupation of Hankow by Chinese Communist forces 
Occupation of Shanghai by Chinese Communist forces 
Occupation of Tsingtao by Chinese Communist forces 
Yen Hsi-shan became Prime Minister in Canton 

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A Century of American Policy, 1844^1943 


For more than half a century the policy of the United States toward 
China has been based on the twin principles of (1) equality of com- 
mercial opportunity, and (2) the maintenance of the territorial and 
administrative integrity and political independence of China. Al- 
though the United States has at times recognized the special relations 
between China and neighboring countries, it has also recognized and 
asserted that the domination of China by any one Power or any group 
of Powers is contrary to the interests both of China and of the United 
States. The United States has advocated a policy of noninterference 
in the internal affairs of China. The United States has taken the posi- 
tion that the Chinese people should be given time to develop those 
political institutions which would best meet their needs in the modern 
world. The United States has also sought to prevent third Powers 
from utilizing disturbances within China as an opportunity for indi- 
vidual or collective aggrandizement. The United States has long 
been interested in the creation of conditions which would permit the 
development of a stable Chinese political organism, and in its relations 
with China has supported the principle of peaceful settlement of dis- 
putes in accordance with the generally recognized precepts of inter- 
national law. 



During the nineteenth century United States policy .toward China 
was expressed by treaties and ordinary diplomatic procedures designed 
to secure equality of trading rights in China. The fundamental prin- 
ciple underlying American relations with China — equality of com- 
mercial opportunity — was incorporated in the first treaty between the 
two Powers, the Treaty of Wanghia signed on July 3, 1844, in the 




form of a most-favored-nation clause. 1 This provision guaranteed 
that whatever treaty rights other Powers gained with respect to trade, 
residence, religious activity, tariffs or other commercial regulations 
would automatically accrue to the United States. The most-favored- 
nation clause was retained in the subsequent commercial treaties nego- 
tiated with China in the nineteenth century, namely the Treaty of 
Tientsin of 1858 2 and the Burlingame Treaty of 1868. 3 The principle 
of equality of commercial opportunity worked well until the late 
1890’s, when new imperialistic pressures seemed to threaten a division 
of China into spheres of interest among the other Great Powers. 


Under the circumstances the United States resorted to a new ap- 
proach, using another formula to secure its objectives. The Open 
Door notes of Secretary of State John Hay to the Powers during the 
period from September to November 1899 gave concrete expression 
to the principle of equality of opportunity. 4 Hay asked the Powers 
involved in the struggle over China to give guarantees that in their 
respective “spheres of influence or interest” they would not interfere 
with the equality of rights of nationals of other countries in matters 
of tariffs, railroad charges, and harbor dues. The replies to these 
notes were somewhat equivocal or conditional, the Russian reply being 
the most evasive of all. Nevertheless the diplomatic language of the 
replies made it possible for Hay to announce to the world that the 
policy of the Open Door had been accepted, and that it was the gov- 
erning policy in China. 

The anti-foreign disturbances in China in 1900, usually referred 
to as the Boxer Rebellion, afforded the United States (which had 
participated with the other Powers in a joint expeditionary force sent 
to rescue the beleaguered legations in Peking) an opportunity to make 
a statement of policy which went a step beyond the Open Door notes 
of the preceding year. In a circular note to the participating Powers, 
dated July 3, 1900, Hay declared that the “policy of the Government 
of the United States is to seek a solution” of the difficulties in China 
which would “preserve Chinese territorial and administrative entity” 
and “safeguard for the world the principle of equal and impartial 
trade with all* parts of the Chinese Empire.” 5 Thus the principle of 
the maintenance of Chinese territorial and administrative entity be- 

1 See annex 1. 

* See annex 2. 

* See annex 3. 

4 See annex 4. 

8 See annex 5. 



came the policy of the United States. This policy was helpful in 
achieving a solution of the difficulties between China and the Powers 
arising from the destruction of property and loss of foreign lives in 
the course of the Boxer Rebellion. The terms of settlement of the 
incident were contained in the Protocol of Peking, signed September 
7 , 1901, which, among other things, required China to pay, over a 
period of years, an indemnity amounting to 333 million dollars. Of 
this the United States claimed only 25 million dollars, which proved 
to be more than adequate to indemnify American nationals. Under 
arrangements provided through Congressional action in 1908 and 1924 
the United States remitted all Boxer indemnity payments not allocated 
to claimants. Altogether the United States returned approximately 
18 million dollars to the Chinese Government, which placed the money 
in a trust fund for the education of Chinese youths in China and in 
the United States. On J anuary 11, 1943, the United States yielded all 
further claims to indemnity payments. 


Since the turn of the century the United States has sought to main- 
tain, by diplomacy, the twin principles of equal commercial oppor- 
tunity and Chinese territorial and administrative integrity on 
numerous occasions. At the same time the United States extended the 
Open Door doctrine by interpreting it to prohibit exclusive mining 
or railway privileges and commercial monopolies. These extensions 
were initially aimed largely at Russia, which was pushing down 
through Manchuria and threatening Chinese control over that vast 
territory. After the Russo-Japanese War, 1904-1905, the principles 
were turned more sharply against Japan, which had taken Russia’s 
place in the southern half of Manchuria as a menace to Chinese 
territorial and administrative integrity. 

When Russia endeavored through pressure upon China to obtain 
a privileged position in Manchuria, the United States circularized the 
Powers on February 1, 1902, protesting that such action was contrary 
to the Open Door policy. The American memorandum stated : 

“An agreement by which China cedes to any corporation or com- 
pany the exclusive right and privilege of opening mines, establishing 
railroads, or in any other way industrially developing Manchuria, 
can but be viewed with the gravest concern by the Government of the 
United States. It constitutes a monopoly, which is a distinct breach 
of the stipulations of treaties concluded between China and foreign 
powers, and thereby seriously affects the rights of American citizens ; 
it restricts their rightful trade and exposes it to being discriminated 
against, interfered with, or otherwise jeopardized, and strongly tends 



toward permanently impairing the sovereign rights of China in this 
part of the Empire, and seriously interferes with her ability to meet 
her international obligations. Furthermore, such concession on the 
part of China will undoubtedly be followed by demands from other 
powers for similar and equal exclusive advantages in other parts of 
the Chinese Empire, and the inevitable result must be the complete 
wreck of the policy of absolute equality of treatment of all nations 
in regard to trade, navigation, and commerce within the confines of 
the Empire. 

“On the other hand, the attainment by one power of such exclusive 
privileges for a commercial organization of its nationality conflicts 
with the assurances repeatedly conveyed to this Government by the 
Imperial Russian Ministry of Foreign Affairs of the Imperial Govern- 
ment’s intention to follow the policy of the Open Door in China, as 
advocated by the Government of the United States and accepted by 
all the treaty powers having commercial interests in that Empire.” 

When, in the following year, the United States learned that Russia 
was pressing China for a bilateral convention which would have pro- 
hibited treaty ports and foreign consuls in Manchuria and would have 
excluded all foreigners except Russians from Chinese public service 
in North China, the United States protested to Russia on April 25, 
1903, that such action was contrary to the Open Door policy and 
injurious to the legitimate interests of the United States in China. 
The Sino- American Treaty of Commerce, signed October 8, 1903, re- 
affirmed the concept of the Open Door and was accompanied by the 
opening of Mukden and Antung in Manchuria to foreign trade, thus 
thwarting Russian attempts to close it. 6 

The Russo-Japanese War of 1904-1905, which was fought mainly 
on Chinese soil, afforded the United States an opportunity to restate 
the basic principles of its China policy. Upon the outbreak of the war, 
Hay on February 10, 1904, appealed to both belligerents to limit as 
much as possible their military operations and to respect the neu- 
trality and “administrative entity” of China. 7 Subsequently he cir- 
cularized the Powers in the interests of the integrity of China and the 
Open Door in the Orient on J anuary 13, 1905 : 

“It has come to our knowledge that apprehension exists on the part 
of some of the powers that in the eventual negotiations for peace 
between Russia and Japan claim may be made for the concession of 
Chinese territory to neutral powers. The President would be loathe 
to share this apprehension, believing that the introduction of ex- 
traneous interests would seriously embarrass and postpone the settle- 

# See annex 6. 

7 See annex 7. 



ment of the issues involved in the present contest in the Far East, thus 
making more remote the attainment of that peace which is so earnestly 
to be desired. For its part, the United States has repeatedly made 
its position well known, and has been gratified at the cordial welcome 
accorded to its efforts to strengthen and perpetuate the broad policy 
of maintaining the integrity of China and the ‘open door’ in the Orient, 
whereby equality of commercial opportunity and access shall be en- 
joyed by all nations. Holding these views the United States disclaims 
any thought of reserved territorial rights or control in the Chinese 
Empire, and it is deemed fitting to make this purpose frankly known 
and to remove all apprehension on this score so far as concerns the 
policy of this nation, which maintains so considerable a share of the 
Pacific commerce of China and which holds such important posses- 
sions in the western Pacific, almost at the gateway of China.” 8 
President Theodore Roosevelt offered his good offices to bring about 
peace negotiations between Russia and Japan. The resultant Treaty 
of Portsmouth, September 5, 1905, pledged the two signatories to 
restore Manchuria to China and to observe measures “which apply 
equally to all nations” in the commerce and industry of Manchuria. 


A few years later, in an exchange of notes between the Secretary 
of State and the Japanese Ambassador in Washington, Japan sub- 
scribed to the twin principles of United States policy toward China. 
By the Root-Takahira Agreement, November 30, 1908, the United 
States and Japan mutually agreed (1) to maintain the status quo 
in the Pacific and to respect each other’s territorial possessions in that 
region; (2) to uphold the Open Door in China; and (3) to support 
by pacific means the “independence and integrity of China.” 9 


In an effort to strengthen the Open Door principle and at the same 
time to discourage the further penetration of Manchurian trade and 
commerce by Russia and Japan, the United States suggested in 1909 
that the Manchurian railroads be taken out of international politics. 
President Taft and Secretary of State Knox saw that the territorial 
integrity and political independence of China in Manchuria were being 
menaced by the railway concessions granted to Japan and Russia, and 
were convinced that this was contrary to the spirit and letter of the 
Open Door. Knox circularized the Powers in November-December 
1909 as follows : 

8 See annex 8. 

9 See annex 9. 



“Perhaps the most effective way to preserve the undisturbed en- 
joyment by China of all political rights in Manchuria and to promote 
the development of those Provinces under a practical application of 
the policy of the Open Door and equal commercial opportunity would 
be to bring the Manchurian highways, the railroads, under an economic, 
scientific, and impartial administration by some plan vesting in China 
the ownership of the railroads through funds furnished for that pur- 
pose by the interested powers willing to participate.” 

Knox also proposed that the nationals of the participating Powers 
should supervise the railroad system during the term of the loan, and 
that the Governments concerned should enjoy for such period “the 
usual preferences for their nationals and materials” upon an equitable 
basis among themselves. 10 Great Britain, Germany, and China 
indicated a willingness to accede in principle to the Knox proposal, 
which was almost brutally rebuffed by Russia and J apan. The result 
of the Knox neutralization scheme was to draw Russia and J apan more 
closely together in defense of their interests in Manchuria and Inner 
Mongolia. Although using the language of the Open Door and the 
territorial integrity of China, they entered into treaty engagements 
on July 4, 1910, and June 25, 1912, which in effect seemed designed 
ultimately to close the door to others and to threaten the integrity 
of China. 



World War I had repercussions in China even prior to the Chinese 
declaration of war (August 14, 1917) against Germany. At the out- 
break of the war China, on August 3, 1914, asked the United States to 
assist in preventing the spread of hostilities to Chinese soil, where 
the belligerents had foreign settlements and leased areas. The United 
States accepted this request and informed the British Government on 
August 11, 1914, of the American “desire to preserve the status quo 
in China.” When Japan entered the war against Germany, Secretary 
of State Bryan on August 19, 1914, informed the Japanese Govern- 
ment that the United States “notes with satisfaction that Japan, in 
demanding the surrender by Germany of the entire leased territory of 
Kiaochow does so with the purpose of restoring that territory to 
China, and that Japan is seeking no territorial aggrandizement in 
China.” Bryan reminded Japan of its pledge to support “the inde- 

10 See annex 10. 



pendence and integrity of China and the principle of equal opportuni- 
ties for the commerce and industry of all nations in China” as con- 
tained in the Root-Takahira Agreement of November 30, 1908. 


Early in 1915 Japan secretly presented to China the Twenty-One 
Demands, which, if accepted in full, would have made China a virtual 
protectorate of Japan. Not only did the Japanese Government de- 
mand further economic and political rights in Manchuria, Shantung, 
and Inner Mongolia, but it also sought exclusive mining and indus- 
trial rights in the Yangtze valley and actually demanded supervisory 
control over Chinese social and political institutions, including not 
only schools and churches but even the Government itself. When the 
United States learned of the Demands it took the opportunity to re- 
affirm its traditional policy toward China. In a note of March 13, 
1915, to the Japanese Ambassador in Washington Bryan reviewed 
American policy since the Open Door notes of 1899, called attention 
to the various international undertakings concerning China, and 
argued that Japan’s Demands were inconsistent with its past pro- 
nouncements regarding the sovereignty of China. The Secretary 
stated that the United States relied upon the “repeated assurances” of 
Japan in regard to “the independence, integrity and commerce of 
China” and on Japan’s taking “no steps” which would be “contrary to 
the spirit of those assurances.” The Secretary pointed out that the 
activity of Americans in China “has never been political, but on the 
contrary has been primarily commercial with no afterthought as to 
their effect upon the governmental policy of China.” Bryan also 
stated : 

“While on principle and under the treaties of 1844, 1858, 1868 and 
1903 with China the United States has grounds upon which to base 
objections to the Japanese ‘demands’ relative to Shantung, South 
Manchuria, and East Mongolia, nevertheless the United States frankly 
recognizes that territorial contiguity creates special relations between 
Japan and these districts.” 

The Secretary asserted, however, that the United States “could not 
regard with indifference the assumption of political, military or 
economic domination over China by a foreign Power”, and expressed 
the hope that Japan would find it consonant with its interests “to 
refrain from pressing upon China an acceptance of proposals which 
would, if accepted, exclude Americans from equal participation in the 
economic and industrial development of China and would limit the 
political independence of that country.” The Secretary concluded his 



note with the statement that the policy of the United States “is 
directed to the maintenance of the independence, integrity and com- 
mercial freedom of China and the preservation of legitimate American 
rights and interests in that Republic.” 11 

Despite these expressed American views and Chinese resistance, 
Japan persisted and forced China, under the pressure of an ultimatum, 
to agree to revised Demands which represented a retreat from the 
extreme position taken when the original Demands were put forth. 
Thereupon Bryan notified both Tokyo and Peking in identic notes 
on May 11, 1915, that the United States “cannot recognize any agree- 
ment or undertaking which has been entered into or which may be 
entered into between the Governments of Japan and China, impair- 
ing the treaty rights of the United States and its citizens in China, 
the political or territorial integrity of the Republic of China, or the 
international policy relative to China commonly known as the Open 
Door policy”. 12 


As a result of its entrance into World War I, the United States 
found itself associated with Japan. Once more the two Powers 
sought to record a joint policy toward China, which had declared 
war against Germany on August 14, 1917, by an exchange of notes 
between the American Secretary of State and the Japanese Special 
Ambassador. By the Lansing-Ishii Agreement of November 2, 1917, 
the United States and Japan reaffirmed their respect for the principles 
of the Open Door and the independence and territorial integrity of 
China. The Agreement read in part : 

“The Governments of the United States and Japan recognize that 
territorial propinquity creates special relations between countries, 
and consequently the Government of the United States recognizes that 
J apan has special interests in China, particularly in the part to which 
her possessions are contiguous. 

“The territorial sovereignty of China, nevertheless, remains unim- 
paired, and the Government of the United States has every confidence 
in the repeated assurances of the Imperial Japanese Government that 
while geographical position gives Japan such special interests they 
have no desire to discriminate against the trade of other nations or to 
disregard the commercial rights heretofore granted by China in 
treaties with other powers.” 13 

11 See annex 11. 

u See annex 12. 

18 See annex 13. 



By a secret protocol, withheld from the published exchange of notes, 
but which the United States considered an inseparable part of the 
Agreement, the two Powers agreed that they would “not take advan- 
tage of the present conditions to seek special rights or privileges in 
China which would abridge the rights of the subjects or citizens of 
other friendly states.” The Lansing-Ishii Agreement was formally 
annulled by an exchange of notes, dated April 14, 1923, following the 
coming into force of the Nine-Power Treaty. 


At the Washington Conference of 1921-1922 the United States, in 
concert with the United Kingdom, exercised its good offices in bringing 
about a settlement of the Shantung controversy between China and 
Japan. Early in World War I Japan seized the German leased terri- 
tory of Kiaochow Bay and subsequently extended its control over the 
entire Shantung peninsula. Japan promised ultimately to restore 
Shantung Province to the sovereignty of China. During the war, how- 
ever, Japan managed, through various treaties, to obtain recognition of 
its dominant position in Shantung by China and the Allies. At the 
Paris Peace Conference in 1919 China demanded the return of the 
German leasehold and German economic privileges in the province. 
Japan, on the other hand, insisted upon a treaty clause which would 
recognize Japanese succession to all German rights and privileges, 
including the railway, in Shantung. The American Delegation at 
Paris supported China, protested against the transfer, and offered an 
alternative plan to cede the former German holdings to the Allied 
and Associated Powers, which were to make the proper disposition 
of them later. President Wilson was not able to hold out against 
the Japanese demands, and a clause was included in the Treaty of 
Versailles by which Germany renounced in favor of Japan its rights 
in Shantung. China thereupon refused to sign the treaty. The con- 
troversy was not resolved during the intervening years. At the 
Washington Conference the Chinese and Japanese delegates met with 
British and American observers to consider the problem. As a result 
of these direct negotiations Japan and China signed a treaty on 
February 4, 1922, which provided for the restoration of Shantung in 
full sovereignty to China, and for the purchase by China of the 
Tsingtao-Tsinan Railway with funds obtained from Japanese bankers 
in the form of a fifteen-year loan secured by a lien on the railroad. 
The reassertion of Chinese sovereignty over Shantung, achieved with 
United States assistance, was a considerable victory for China, al- 
though the terms of the Japanese railway loan did not greatly disturb 
Japan’s economic supremacy in that province. 




After the close of World War I the United States succeeded in hav- 
ing the twin principles of its policy toward China written into a 
treaty. The Powers participating in the Washington Conference 
signed the Nine-Power Treaty on February 6, 1922. The signatories, 
other than China, agreed to respect the sovereignty, the independence, 
and the territorial and administrative integrity of China, and to up- 
hold the principle of the Open Door. The Powers, other than China, 
also agreed “to refrain from taking advantage of conditions in China 
in order to seek special rights or privileges which would abridge the 
rights of subjects or citizens of friendly states, and from countenancing 
action inimical to the security of such states.” 14 

Mention should be made of the related naval arrangements con- 
cluded at the Washington Conference. The Five-Power Naval 
Treaty, signed on February 5, 1922, provided for the reduction and 
limitation of naval forces, including those of the United States in the 
Pacific which, together with the provision for the non-fortification of 
United States possessions in the Far East, gave evidence that the 
policy and purpose of the United States in the Far East was only 

By the Nine-Power Treaty traditional American policy was given a 
broad, nine-power base. This treaty provided a sort of charter gov- 
erning the relations between China and the Powers for almost two 
decades. The treaty was one of the principal points at issue with 
Japan after the seizure of Manchuria in 1931-1933, and was the subject 
of the Brussels Conference called in 1937 pursuant to a League of 
Nations resolution after the outbreak of the undeclared war between 
Japan and China. The Brussels Conference, supported by the United 
States, adopted a resolution on November 24, 1937, which, after re* 
viewing Far Eastern developments since the Washington Conference, 
reaffirmed the principles of the Nine-Power Treaty “as being among 
the basic principles which are essential to world peace and orderly 
progressive development of national and international life.” The 
Brussels Conference recommended suspension of hostilities between 
Japan and China and expressed the hope, which was not realized, that 
the conference might be reconvened at a later date. 


The Nine-Power Treaty of February 6, 1922, also contained a pro- 
vision by which the signatory Powers, other than China, agreed “to 

14 See annex 14. 



provide the fullest and most unembarrassed opportunity to China to 
develop and maintain for herself an effective and stable government”. 
This was in accordance with the long-held view of the United States 
that China should be given time to progress along the road of national 
development. The United States sympathized with the efforts of 
Chinese people to achieve those political institutions which would best 
meet their needs in the modern world and had followed a policy of 
strict neutrality on internal Chinese developments. When the Manchu 
dynasty had been challenged by the Republican revolution in October 
1911, the United States had maintained its neutrality in the incipient 
civil war and had helped neither the recognized government at Peking 
nor the Republican revolutionists in the Yangtze Valley. Following 
the abdication of the Manchus, the Chinese Republic was established on 
February 12, 1912. De jure recognition by the United States of the 
Republican Government followed on May 2, 1913. 


Subsequently in the 1920’s when the Chinese Nationalists, under the 
leadership of the Kuomintang, were driving northward through the 
Yangtze Valley in an effort to unite all China, Secretary of State Frank 
B. Kellogg restated American sympathy with Chinese nationalism 
and the American policy of non-interference in the internal affairs 
of China. The statement by the Secretary of State, made public on 
J anuary 27, 1927, said in part : 

“The United States has always desired the unity, the independence 
and prosperity of the Chinese nation. It has desired that tariff 
control and extraterritoriality provided by our treaties with China 
should as early as possible be released 

“The Government of the United States has watched with sympathetic 
interest the nationalistic awakening of China and welcomes every 
advance made by the Chinese people toward reorganizing their sys- 
tem of Government. 

“During the difficult years since the establishment of the new regime 
in 1912, the Government of the United States has endeavored in every 
way to maintain an attitude of the most careful and strict neutrality 
as among the several factions that have disputed with one another for 
control in China. . . . This Government wishes to deal with China in 
a most liberal spirit. It holds no concessions in China and has never 
manifested any imperialistic attitude toward that country. It desires, 
however, that its citizens be given equal opportunity with the citizens 
of the other Powers to reside in China and to pursue their legitimate 



occupations without special privileges, monopolies or spheres of special 
interest or influence.” 15 

Following the Nanking “incident” of March 24, 1927, when for- 
eigners were subjected to indignities at the hands of Chinese National- 
ist forces and were rescued by Western gunboats, the United States 
strove to settle the matter in such a way as to compensate the Powers 
for the injuries resulting from the civil strife, but without punitive 
measures against the Chinese nation. Chinese xenophobia had pre- 
vious manifestations, the Boxer Rebellion in 1900 being the best- 
known example. Sporadic outbreaks of anti-foreignism occurred in 
various parts of China during the Chinese Nationalist movement of 
the 1920’s. Despite these manifestations of Chinese xenophobia the 
United States dealt sympathetically with the new regime, made its 
peace with the new central government, and ultimately extended 
recognition to it. 


After China had achieved a degree of unity under the Kuomintang 
leadership of General Chiang Kai-shek, the United States recognized 
the National Government of the Republic of China on July 25, 1928, 
by concluding with that Government a treaty restoring tariff autonomy 
to China — the first nation to do so. 16 In connection with the nego- 
tiation of this treaty Mr. Kellogg stated : 

“The good will of the United States toward China is proverbial and 
the American Government and people welcome every advance made 
by the Chinese in the direction of unity, peace and progress. We do 
not believe in interference in their internal affairs. We ask of them 
only that which we look for from every nation with which we main- 
tain friendly intercourse, specifically, proper and adequate protection 
of American citizens, their property and their lawful rights, and, in 
general, treatment in no way discriminatory as compared with the 
treatment accorded to the interests or nationals of any other country.” 


As the tide of Chinese nationalism swept northward in 1928 and 1929 
it came into conflict with the rights and privileges of the Soviet Union 
in Manchuria. In mid-1929 a dispute developed between China and 
the Soviet Union over the Chinese Eastern Railway in Manchuria. 
The United States immediately took the lead in attempting to achieve 

u See annex 15. 

” See annex 16. 



a peaceful solution. The efforts of Secretary of State Stimson failed 
to arrest intermittent armed clashes along the Manchurian border. In 
mid-November Russian troops invaded Manchuria in force. 

Eventually, following direct negotiations, the U.S.S.R. and China 
on December 22, 1929, signed a Protocol under which the controversy 
was settled on the basis of restoring the statics quo ante , and the Soviet 
Union retained the special privileges in the Chinese Eastern Railway 
zone originally acquired by the Czarist Government in the 1890 ’s but 
subsequently redefined in the Sino-Soviet Treaties of 1924. 




When Japan embarked upon a policy of forcible expansion in Man- 
churia in September 1931, the United States in cooperation with the 
League of Nations, of which it was not a member, sought a peaceful 
solution of the controversy. 

As it became evident that Japan was determined to persist in its 
course of conquest, Mr. Stimson addressed notes to both Japan and 
China on January 7, 1932, in which he announced the policy of non- 
recognition of territorial changes brought about by force. In identic 
notes the Secretary informed the two Powers that the United States 
“cannot admit the legality of any situation de facto nor does it intend 
to recognize any treaty or agreement entered into between those 
Governments, or agents thereof, which may impair the treaty rights of 
the United States or its citizens in China, including those which 
relate to the sovereignty, the independence, or the territorial and 
administrative integrity of the Republic of China, or to the inter- 
national policy relative to China, commonly known as the open door 
policy ; and that it does not intend to recognize any situation, treaty or 
agreement which may be brought about by means contrary to the 
covenants and obligations of the Pact of Paris of August 27, 1928, 
to which Treaty both China and Japan, as well as the United States, 
are parties.” 17 

After hostilities had been extended to Shanghai and Manchurian 
independence had been proclaimed, Mr. Stimson sought world-wide 
support for this position in a letter to Senator Borah, Chairman of 
the Senate Committee on Foreign Relations, dated February 23, 1932, 
which was made public the next day. At the same time the Secretary 
reaffirmed the policy of his predecessor as regards American sympathy 

17 See annex 17. 



with Chinese nationalism and non-interference in Chinese internal 
affairs. After tracing the development of traditional United States 
policy toward China since the turn of the century, Mr. Stimson 
commented on the principles underlying the Nine-Power Treaty as 
follows : 

“This Treaty thus represents a carefully developed and matured 
international policy intended, on the one hand, to assure to all of the 
contracting parties their rights and interests in and with regard to 
China, and on the other hand, to assure to the people of China the 
fullest opportunity to develop without molestation their sovereignty 
and independence according to the modern and enlightened standards 
believed to maintain among the peoples of this earth. At the time 
this Treaty was signed, it was known that China was engaged in an 
attempt to develop the free institutions of a self-governing republic 
after her recent revolution from an autocratic form of government; 
that she would require many years of both economic and political 
effort to that end ; and that her progress would necessarily be slow. 
The Treaty was thus a covenant of self-denial among the signatory 
powers in deliberate renunciation of any policy of aggression which 
might tend to interfere with that development. It was believed— and 
the whole history of the development of the ‘Open Door’ policy reveals 
that faith — that only by such a process, under the protection of such 
an agreement, could the fullest interests not only of China but of all 
nations which have intercourse with her best be served.” 

In stressing the obligations assumed by the signatories of the 
Nine-Power Treaty, Mr. Stimson pointed out that it was but one of 
several “interrelated and interdependent” treaties negotiated at the 
Washington Conference. He stated that the “willingness of the 
American Government to surrender its then commanding lead in 
battleship construction and to leave its positions at Guam and in the 
Philippines without further fortifications, was predicated upon, 
among other things, the self-denying covenants contained in the Nine- 
Power Treaty which assured the nations of the world not only of 
equal opportunity for their Eastern trade but also against the military 
aggrandizement of any other power at the expense of China.” Calling 
attention to the enlightened principles embodied in the Kellogg- 
Briand Pact and the Nine-Power Treaty, Secretary Stimson continued : 
“We believe that this situation would have been avoided had these 
covenants been faithfully observed, and no evidence has come to us to 
indicate that a due compliance with them would have interfered 
with the adequate protection of the legitimate rights in China of the 
signatories of those treaties and their nationals.” He suggested that 



the rest of the world join the United States in applying the non- 
recognition principle to “any situation, treaty or agreement entered 
into” by Japan and China “in violation of the covenants of these 
treaties, which affect the rights of our Government or its citizens in 
China.” If other Governments were to do so “a caveat will be placed 
upon such action which, we believe, will effectively bar the legality 
hereafter of any title or right sought to be obtained by pressure or 
treaty violation.” 

The Secretary concluded his letter with the statement : 

“In the past our Government, as one of the leading powers on the 
Pacific Ocean, has rested its policy upon an abiding faith in the future 
of the people of China and upon the ultimate success in dealing with 
them of the principles of fair play, patience, and mutual goodwill. 
We appreciate the immensity of the task which lies before her states- 
men in the development of her country and its government. The 
delays in her progress, the instability of her attempts to secure a re- 
sponsible government, were foreseen by Messrs. Hay and Hughes and 
their contemporaries and were the very obstacles which the policy of 
the Open Door was designed to meet. We concur with those states- 
men, representing all the nations, in the Washington Conference who 
decided that China was entitled to the time necessary to accomplish 
her development. We are prepared to make that our policy for the 
future.” 18 

The non-recognition principle enunciated by Secretary Stimson, 
which was also accepted by the League of Nations, remained the basis 
of United States policy and was reaffirmed on numerous occasions 
during the years between the time of its enunciation and American 
involvement in World War II following the Japanese attack on Pearl 


The United States continued in the following years to assert its treaty 
rights in China in the face of the extension of Japanese activities. 
When a Japanese Foreign Office spokesman (Mr. Eiji Amau) issued 
a statement on April 17, 1934, proclaiming (1) Japanese “special re- 
sponsibilities in East Asia” and (2) Japanese political guardianship 
of China, and warning the Powers against financial, political, or com- 
mercial undertakings prejudicial to Japanese interests in China, the 
United States quickly replied. In a carefully worded note delivered 
in Tokyo on April 29, 1934, the United States reaffirmed its treaty 

18 See annex 18. 



rights. Secretary Hull restated American policy toward China as 
follows : 

“The relations of the United States with China are governed, as 
are our relations with Japan and our relations with other countries, 
by the generally accepted principles of international law and the pro- 
visions of treaties to which the United States is a party. In interna- 
tional law, in simple justice, and by virtue of treaties, the United States 
has with regard to China certain rights and certain obligations. In 
addition, it is associated with China or with Japan or with both, to- 
gether with certain other countries, in multilateral treaties relating 
to rights and obligations in the Far East, and in one great multilateral 
treaty to which practically all the countries of the world are parties. 

“Entered into by agreement, for the purpose of regulating relations 
between and among nations, treaties can lawfully be modified or be 
terminated — but only by processes prescribed or recognized or agreed 
upon by the parties to them. 

“In the international associations and relationships of the United 
States, the American Government seeks to be duly considerate of the 
rights, the obligations and the legitimate interests of other countries, 
and it expects on the part of other governments due consideration of 
the rights, the obligations and the legitimate interests of the United 

“In the opinion of the American people and the American Govern- 
ment, no nation can, without the assent of the other nations concerned, 
rightfully endeavour to make conclusive its will in situations where 
there are involved the rights, the obligations and the legitimate inter- 
ests of other sovereign states.” 

During this time the puppet regime in Manchuria planned to estab- 
lish an official monopoly, the Manchurian Petroleum Company, for 
the distribution of oil products in Manchuria. The United States 
protested to Tokyo on July 7, 1934, and asked the Japanese Govern- 
ment to “use its influence to discourage the adoption by the Manchurian 
authorities of measures which tend to violate the principle of the Open 
Door and the provisions of various treaties which the authorities in 
Manchuria have agreed to respect.” A number of notes on the subject 
were exchanged in the following months in which the Japanese Gov- 
ernment refused to accept responsibility for the actions of the Man- 
churian officials, while the United States continued to maintain the 
principle of the Open Door. Finally, the United States summarized 
its position in this controversy in a note to the Japanese Government, 
dated April 15, 1935, as follows : 



“The American Government greatly regrets that the Japanese Gov- 
ernment has not seen its way clear to use the influence which it 
possesses through its close and peculiar relations with the present 
regime in Manchuria to uphold in practice the principle of the Open 
Door and the fulfillment of the treaty obligations which both the 
Japanese Government and the authorities in Manchuria have on 
numerous occasions declared that they would maintain. 

. . the American Government is constrained to express its con- 
sidered view that upon the Japanese Government must rest the ulti- 
mate responsibility for injury to American interests resulting from 
the creation and operation of the petroleum monopoly in Manchuria.” 


Japan persisted in penetrating deeper into China. The attempt by 
Japan, late in 1935, to convert the five northern provinces of Hopei, 
Chahar, Suiyuan, Shansi, and Shantung into an autonomous area 
caused no change in the American attitude. In a statement to the 
press on December 5, 1935, Mr. Hull reiterated the position of the 
United States : 

“Unusual developments in any part of China are rightfully and 
necessarily of concern not alone to the Government and people of 
China but to all of the many powers which have interests in China. 
For, in relations with China and in China, the treaty rights and the 
treaty obligations of the ‘treaty powers’ are in general identical. The 
United States is one of those powers. 

“In the area under reference the interests of the United States are 
similar to those of other powers. In that area there are located, and 
our rights and obligations appertain to, a considerable number of 
American nationals, some American property, and substantial Ameri- 
can commercial and cultural activities. The American Government 
is therefore closely observing what is happening there. 

“Political disturbances and pressures give rise to uncertainty and 
misgiving and tend to produce economic and social dislocations. They 
make difficult the enjoyment of treaty rights and the fulfillment of 
treaty obligations. 

“The views of the American Government with regard to such 
matters not alone in relation to China but in relation to the whole 
world are well known. As I have stated on many occasions, it seems 
to this Government most important in this period of world-wide po- 
litical unrest and economic instability that governments and peoples 
keep faith in principles and pledges. In international relations there 
must be agreements and respect for agreements in order that there 



may be the confidence and stability and sense of security which are 
essential to orderly life and progress. This country has abiding faith 
in the fundamental principles of its traditional policy. This Gov- 
ernment adheres to the provisions of the treaties to which it is a party 
and continues to bespeak respect by all nations for the provisions of 
treaties solemnly entered into for the purpose of facilitating and regu- 
lating, to reciprocal and common advantage, the contacts between 
and among the countries signatory.” 19 


At the start of the undeclared war of Japan in China, following a 
clash between Japanese and Chinese troops on July 7, 1937, at the 
Marco Polo Bridge outside Peiping, Mr. Hull urged a policy of self- 
restraint upon the Japanese Government. On July 16, 1937, the Sec- 
retary issued a statement on fundamental principles of international 
policy containing the precepts advocated by the United States in inter- 
national relations which were applicable to the Sino- Japanese con- 
troversy. The statement by Mr. Hull enumerated such principles as 
maintenance of peace; abstinence from the use of force in relations 
between states; abstinence from interference in the internal affairs 
of other nations ; adjustment of problems in international relations by 
processes of peaceful negotiation and agreement ; faithful observance 
of international agreements ; modification of provisions of treaties by 
orderly processes carried out in a spirit of mutual helpfulness and 
accommodation; respect by all nations for the rights of others and 
performance by all nations of established obligations ; promotion of 
economic security and stability throughout the world; and effective 
equality of commercial opportunity and application of the principle 
of equality of treatment. These principles were reaffirmed in a later 
statement issued by the Department of State on August 23, 1937, in 
which it was made clear that the United States regarded these prin- 
ciples as being applicable to the Pacific area. 

During the interval between the first and second statements men- 
tioned above, the United States sought ways and means of bringing 
about an amicable settlement between China and Japan. Besides 
urging both disputants to seek a peaceful solution the United States 
on August 10, 1937, informally offered its good offices to Japan in an 
effort to settle the controversy. This offer contemplated providing 
neutral ground where Japanese and Chinese representatives might 
meet to negotiate, and giving assistance in adjusting the difficulties 

19 See annex 19. 



which might develop during the negotiations. As Japan did not 
respond to the offer, the United States Government felt that no useful 
purpose would he served in making a similar approach to the Chinese 


OCTOBER 5, 1937 

As Japanese military operations in China increased in intensity it 
became evident that Japan was bent upon solving the controversy by 
force. In an address delivered at Chicago on October 5, 1937, Presi- 
dent Roosevelt, without mentioning any Power by name, condemned 
the Japanese resort to undeclared war against China. The President 
cited the spreading “epidemic of world lawlessness” and drew the 
parallel that in case of an epidemic of physical disease the community 
joins in a “quarantine” of the patients in order to protect the health 
of the community against the spread of the disease. The President 
stated that war was a “contagion whether it be declared or undeclared”, 
and that it “can engulf states and peoples remote from the original 
scene of hostilities.” The following day the Department of State 
underscored American sympathy with China by issuing a statement 
which said in part : 

“In the light of the unfolding developments in the Far East, the 
Government of the United States has been forced to the conclusion 
that the action of Japan in China is inconsistent with the principles 
which should govern the relationships between nations and is con- 
trary to the provisions of the Nine-Power Treaty of February 6, 1922, 
regarding principles and policies to be followed in matters concerning 
China, and to those of the Kellogg-Briand Pact of August 27, 1928.” 20 


During the undeclared war the United States on numerous occasions 
protested against the violation of its treaty rights in China by Japan. 
The United States included within the term “treaty rights” protection 
of American missionaries and their property, as well as protection of 
Americans engaged in commercial activity. In the course of thfeir 
campaigns, Japan’s military forces frequently violated American mis- 
sionary property either by outright seizure for occupation purposes or 
by bombing and shelling of the property. It appeared that Japanese 
violation of American missionary property was part of a deliberate 
attempt to eradicate American cultural influence in China, inasmuch as 

See annex 20. 



American missionaries, through their religious, educational, and medi- 
cal work, had played a very large part in spreading Western concepts 
of thought ever since the opening of China to intercourse with the 
West, and in developing a close cultural tie between the United States 
and China. Although the mission stations, frequently located in the 
interior, were for the most part conspicuously marked with the Ameri- 
can flag, the J apanese usually disregarded such marking. The United 
States protested these violations of American property in China, but 
received as little satisfaction from the Japanese Government on this 
aspect as it had in answer to its protests on violations of commercial 

In a note to J apan, dated October 6, 1938, the United States called 
attention to the “categorical assurances” given by the Japanese Gov- 
ernment that the Open Door would be maintained in China. The note 
reviewed numerous instances in which actions by Japanese agencies in 
China had contravened these assurances and interfered with American 
treaty rights in China. The note closed with a request that Japan 
implement its “assurances already given with regard to the main- 
tenance of the Open Door and to non-interference with American 
rights” by taking the following effective measures : 

“1. The discontinuance of discriminatory exchange control and of 
other measures imposed in areas in China under Japanese control 
which operate either directly or indirectly to discriminate against 
American trade and enterprise ; 

“2. The discontinuance of any monopoly or of any preference which 
would deprive American nationals of the right of undertaking any 
legitimate trade or industry in China or of any arrangement which 
might purport to establish in favor of Japanese interests any general 
superiority of rights with regard to commercial or economic develop- 
ment in any region of China ; and 

“3. The discontinuance of interference by Japanese authorities in 
China with American property and other rights including such forms 
of interference as censorship of American mail and telegrams and 
restrictions upon residence and travel by Americans and upon Ameri- 
can trade and shipping.” 21 

In its reply of November 18, 1938, Japan denied the American con- 
tention that Japanese actions in China violated American treaty rights 
or discriminated against American interests in China. The note from 
the Japanese Foreign Minister to the American Ambassador in Japan 
indicated that Japan did not interpret the principle of the Open Door 

n See annex 21. 


in the same way as did the United States. The reply of the Japanese 
Foreign Minister of November 18, 1938, concluded as follows : 

“At present Japan, devoting its entire energy to the establishment 
of a new order based on genuine international justice throughout East 
Asia, is making rapid strides toward the attainment of this objective. 
The successful accomplishment of this purpose is not only indispens- 
able to the existence of Japan, but also constitutes the very foundation 
of the enduring peace and stability of East Asia. 

“It is the firm conviction of the J apanese Government that now, at 
a time of the continuing development of new conditions in East Asia, 
an attempt to apply to present and future conditions without any 
changes concepts and principles which were applicable to conditions 
prevailing before the present incident does not in any way contribute 
to the solution of immediate issues and further does not in the least 
promote the firm establishment of enduring peace in East Asia. 

“The Imperial Government, however, does not have any intention 
of objecting to the participation in the great work of the reconstruc- 
tion of East Asia by your Excellency’s country or by other Powers, 
in all fields of trade and industry, when such participation is under- 
taken with an understanding of the purport of the above stated re- 
marks ; and further, I believe that the regimes now being formed in 
China are also prepared to welcome such participation.” 22 

The American note of December 30, 1938, delivered by the Ambas- 
sador in Tokyo to the Japanese Foreign Minister, challenged Japan’s 
interpretation of the Open Door principle and reaffirmed the views 
contained in the previous communication of October 6, 1938. The 
United States again called upon Japan to observe its treaty obliga- 
tions. The United States denied that its treaty rights in China could 
be abrogated by the unilateral action of Japan, and stressed the fact 
that it was always ready and willing to discuss treaty revision by or- 
derly processes of negotiation and agreement among the parties thereto. 
The note of December 30, 1938, staled : 

“The admonition that enjoyment by the nationals of the United 
States of non-discriminatory treatment in China — a general and well 
established right — is henceforth to be contingent upon an admission 
by the Government of the United States of the validity of the concep- 
tion of J apanese authorities of a ‘new situation’ and a ‘new order’ in 
East Asia, is, in the opinion of this Government, highly paradoxi- 
cal. . . . 

See annex 22. 



“Whatever may be the changes which have taken place in the situa- 
tion in the Far East and whatever may be the situation now, these 
matters are of no less interest and concern to the American Govern- 
ment than have been the situations which have prevailed there in the 
past, and such changes as may henceforth take place there, changes 
which may enter into the producing of a ‘new situation’ and a ‘new 
order’, are and will be of like concern to this Government. This Gov- 
ernment is well aware that the situation has changed. This Gov- 
ernment is also well aware that many of the changes have been brought 
about by the action of Japan. This Government does not admit, how- 
ever, that there is need or warrant for any one Power to take upon it- 
self to prescribe what shall be the terms and conditions of a ‘new 
order’ in areas not under its sovereignty and to constitute itself the 
repository of authority and the agent of destiny in regard 
thereto. . . . 

“The United States has in its international relations rights and 
obligations which derive from international law and rights and obli- 
gations which rest upon treaty provisions. Of those which rest on 
treaty provisions, its rights and obligations in and with regard to 
China rest in part upon provisions in treaties between the United 
States and China and in part on provisions in treaties between the 
United States and several other powers including both China and 
Japan. These treaties were concluded in good faith for the pur- 
pose of safeguarding and promoting the interests not of one only but 
of all of their signatories. The people and the Government of the 
United States cannot assent to the abrogation of any of this country’s 
rights or obligations by the arbitrary action of agents or authorities 
of any other country. 

“The Government of the United States has, however, always been 
prepared and is now prepared to give due and ample consideration 
to any proposals based on justice and reason which envisage the re- 
solving of problems in a manner duly considerate of the rights and 
obligations of all parties directly concerned by processes of free nego- 
tiation and new commitment by and among all of the parties so con- 
cerned. There has been and there continues to be opportunity for 
the Japanese Government to put forward such proposals. This Gov- 
ernment has been and it continues to be willing to discuss such pro- 
posals, if and when put forward, with representatives of the other 
powers, including Japan and China, whose rights and interests are 
involved, at whatever time and in whatever place may be commonly 
agreed upon. 



“Meanwhile, this Government reserves all rights of the United 
States as they exist and does not give assent to any impairment of any 
of those rights.” 28 

This and subsequent protests regarding violation of American 
treaty rights in China were equally unproductive of positive results. 

From the beginning of Japan’s undeclared war the sympathies of 
the American people were with China. Despite this fact, and despite 
Japanese violations of American treaty rights in China, the United 
States continued to sell war supplies to Japan for about two and 
a half years after the commencement of Sino- Japanese hostilities in 
accordance with the traditional theory of freedom of trade, and the 
then existing concepts of neutrality and freedom of the seas. F urther- 
more, during these years the United States tried to steer a course 
which would not involve it in hostilities in the Far East. 


United States interest in the maintenance of Chinese administrative 
integrity under existing arrangements continued unabated through- 
out the undeclared war. Beginning in the fall of 1937, the United 
States repeatedly made representations to Japan regarding the failure 
of the latter to maintain the integrity of the Chinese Maritime Customs 
Administration 24 and the Chinese Salt Administration, the revenues 
from both of which had been pledged to service foreign loans, includ- 
ing American loans. The representations did not deter Japan from 
its course, which included setting up various “autonomous” regimes 
in those parts of China occupied by the Japanese Army. 

Late in 1939 the United States learned that Japan was considering 
setting up a Chinese central regime at Nanking under Wang Ching- 
wei. The United States took the position that such a regime would 
be a purely artificial creation, lacking any broad Chinese popular 
support; that it would be designed primarily to serve the special 
purposes of Japan; and that it would result in depriving the people 
and the Government of the United States, as well as those of other 
third countries, of long established rights of equal opportunity and 
fair treatment in China which were legally theirs. When the new 
regime was set up in March 1940 the United States announced that 
it would continue to recognize the National Government of the Re- 
public of China whose capital was then at Chungking. In a forceful 

33 See annex 23. 

34 The United States in 1928 had been the first country to restore tariff 
autonomy to China. 



public statement on March 30, 1940, Mr. Hull denounced the use of 
force in setting up the new Chinese regime under Japanese auspices 
as follows : 

“In the light of what has happened in various parts of China 
since 1931, the setting up of a new regime at Nanking has the ap- 
pearance of a further step in a program of one country by armed 
force to impose its will upon a neighboring country and to block off 
a large area of the world from normal political and economic rela- 
tionships with the rest of the world. The developments there appear 
to be following the pattern of other regimes and systems which have 
been set up in China under the aegis of an outside power and which 
in their functioning especially favor the interests of that outside power 
and deny to nationals of the United States and other third countries 
enjoyment of long-established rights of equal and fair treatment which 
are legally and justly theirs. 

“The Government of the United States has noted statements of 
high officials of that outside power that their country intends to re- 
spect the political independence and the freedom of the other country 
and that with the development of affairs in East Asia this intention 
will be demonstrated. To this Government the circumstances, both 
military and diplomatic, which have attended the setting up of the 
new regime at Nanking do not seem consistent with such an intention. 

“The attitude of the United States toward use of armed force as an 
instrument of national policy is well known. Its attitude and posi- 
tion with regard to various aspects of the situation in the Far East 
have been made clear on numerous occasions. That attitude and 
position remain unchanged. 

“This Government again makes full reservation of this country’s 
rights under international law and existing treaties and agreements.” 25 


By way of moral and material support to China in its resistance to 
Japan’s undeclared war, the United States gave notice to Japan on 
July 26, 1939, of its desire to terminate the Treaty of Commerce and 
Navigation between the United States and Japan signed on Febru- 
ary 21, 1911. As a result of this action, after January 26, 1940, the 
United States was in a position to resort to successive economic meas- 
ures against Japan. After the termination of the commercial treaty 
the United States increasingly restricted the shipment of oil, scrap 
iron, machinery, machine tools, and other war materiel to Japan. 
(A moral embargo on the shipment of aircraft, aircraft parts and ac- 

See annex 24. 



cessories, and aerial bombs to Japan had been in effect since mid-1938.) 
On July 26, 1941, President Roosevelt issued an Executive Order 
freezing Japanese assets in the United States, thereby virtually cut- 
ting off all trade with Japan. 

The United States also supported China with positive measures in 
its resistance against Japanese conquest. American aviators on active 
duty were permitted to enter the Reserves and to join the Chinese 
armed forces, a military mission was sent to China, and China was 
declared eligible for lend-lease assistance on May 6, 1941. In addi- 
tion, there were various economic measures which are discussed later 
in this chapter. 


Beginning in the spring of 1941 the United States and Japan en- 
tered into informal, exploratory conversations for a comprehensive 
and peaceful settlement of the various political and economic prob- 
lems of the F ar East. During these conversations, which lasted until 
December 7, 1941, an effort was made to draft an agreement containing 
the principles on which peace could be maintained in the Pacific area. 
The United States remained firm in its conviction that an agreement 
should contain the following principles which were to be supported 
by both Powers : 

1. The principle of the inviolability of territorial integrity and 
sovereignty of each and all nations. 

2. The principle of non-interference in the internal affairs of other 

3. The principle of equality, including equality of commercial 
opportunity and treatment. 

4. The principle of reliance upon international cooperation and 
conciliation for the prevention and pacific settlement of controversies 
and for improvement of international conditions by peaceful methods 
and processes. 26 

The United States proposed that all Japanese forces in China be 
withdrawn, and that the National Government of the Republic of 
China be supported — militarily, politically, and economically — as 
against any other regime in China. The United States was willing 
to reestablish normal trade relations with Japan and to improve 
economic relations between the two countries. Japan, on the other 
hand, sought to obtain recognition from the United States of Japa- 
nese hegemony in the Far East. Among other things, Japan wanted 
the United States to discontinue furnishing aid to the Nationalist 


See annex 25. 



regime in Chungking which was resisting Japanese onslaughts. The 
United States refusal to stop its support of China and the unwilling- 
ness of the United States to compromise on the principle of Chinese 
sovereignty were among the immediate motivations of the Japanese 
attack upon Pearl Harbor on December 7, 1941. This Japanese ag- 
gression abruptly terminated the bilateral informal conversations. 


Following the attack on Pearl Harbor the United States and China 
fought side by side against Japan. The United States had already 
been giving assistance to China, in accordance with the American 
policy of extending aid to nations resisting aggression, but now that 
assistance was accelerated and increased in scope. It included lend- 
lease, and military and financial assistance. 


On March 15, 1941, four days after the passage of the Lend-Lease 
Act, President Roosevelt made an address in which he said : “China 
likewise expresses the magnificent will of millions of plain people to 
resist the dismemberment of their Nation. China, through the Gen- 
eralissimo, Chiang Kai-shek, asks our help. America has said that 
China shall have our help.” After a lend-lease program to meet the 
emergency needs of China had been developed following consultations 
between Chinese and American officials, the President, on May 6, 1941, 
in accordance with the provisions of the Act, declared the defense of 
China to be vital to the defense of the United States. A Master Lend- 
Lease Agreement with China was not signed, however, until June 2, 
1942. 27 

Lend-lease aid to China was begun in 1941, and was aimed par- 
ticularly at improving transport over the Burma Road, the only artery 
through which goods could flow into unoccupied China. The first 
lend-lease shipments consisted primarily of trucks, spare parts, motor 
fuel, and lubricants for use on the Burma Road and material for the 
development of the highway. At the request of Generalissimo Chiang 
Kai-shek a mission of American traffic experts was sent to China in 
June 1941, to survey the Burma Road and make recommendations for 
increasing traffic over it. On the basis of these recommendations the 
Chinese Government undertook a number of measures to improve the 
administration of the road. Additional spare parts and repair equip- 
ment were furnished to China under lend-lease, and a number of 

27 See annex 26 . 



American motor-traffic technicians were recruited in the United States 
and sent to China at lend-lease expense. The United States also 
furnished road-building equipment and asphalt under lend-lease 
to assist China in hard-surfacing the Burma Road. As a result of 
these efforts and of the arrival of large numbers of American trucks, 
the tonnage carried over the Burma Road by November 1941, was 
almost four times greater than it had been during the early months of 
1941. The quantity of material carried was increased from 4,000 tons 
a month at the beginning of 1941 to 15,000 tons in November 1941. 

While the capacity of the Burma Road was being expanded, lend- 
lease was helping in the attempt to open a second route into China. 
During 1941 lend-lease fimds amoimting to 15 million dollars were 
allocated to China for use in constructing a railroad from Burma into 
China which had been started by the Chinese Government in 1938, and 
which would have made possible a great increase in the volume of sup- 
plies transported to China through the Burmese port of Rangoon. 
The completion of this project was prevented, however, by successful 
Japanese military operations in Burma. 

The fall of Burma and the seizure of the southern portion of the 
Burma Road by the Japanese early in 1942 left air transport as the 
only effective means of getting supplies into China. Great progress 
was made, particularly during 1943, in the development of an air- 
transport route into China. In the month of December 1943, for ex- 
ample, twice as much cargo (13,450 short tons) was flown into China as 
in all 1942 (5,258 short tons) . In January 1944, the tonnage of goods 
flown into China was seven times that of January 1943 — 14,472 short 
tons as compared to 1,923 short tons — and the monthly tonnage con- 
tinued to increase. It should be pointed out, however, that a very 
large proportion of the supplies flown into China during this period 
was destined for the United States miiltary forces then operating in 
China. Some of this traffic was carried by planes operated by the 
China National Aviation Corporation, part of whose fleet of cargo 
planes was furnished to China through lend-lease channels. The bulk 
of the supplies which were flown from India to China was, however, 
transported by the Tenth United States Air Force between April and 
December 1942, and subsequently by the United States Air Transport 
Command, which, beginning in December 1942, operated a ferry 
service 500 miles long between Assam, India and the Yunnan plateau, 
over the towering “Hump” of the Himalayas — the most difficult supply 
operation of the entire war. 

At the same time efforts were made under the lend-lease program 
to develop new land supply routes to China. By the end of 1943 
American engineers were constructing the Ledo Road from Assam in 



India across upper Burma to China. (This road, renamed the Stil- 
well Road, was finally opened early in 1945.) India became the great 
supply base for operations whose objectives were the expulsion of 
Japan from Burma and the reopening of land transportation through 
that area for supplies for China. Stockpiles in India of material for 
China, awaiting shipment as soon as new transportation routes were 
opened, were steadily growing by the end of 1943. 

The total value of lend-lease supplies transferred to China through 
December 31, 1943, amounted to 201 million dollars, of which 175.6 mil- 
lion dollars represented goods and 25.4 million dollars represented 
services rendered. In addition, goods valued at 191.7 million dollars 
were consigned to the American commanding general in the China- 
Burma-India Theater for transfer to China. 27a 

MILITARY AID, 1941-1943 

The United States began to give military aid to China even before 
the United States became a belligerent in World War II. The lend- 
lease supplies that were provided China between the time of the cutting 
of the Burma Road and the end' of 1943 had the effect of greatly in- 
creasing this form of assistance. Early in 1941 the United States and 
China developed a project under lend-lease for equipping and train- 
ing large numbers of Chinese forces. The United States Government 
subsequently organized a military mission composed of specialists in 
all phases of modern warfare to advise Chinese authorities on the use 
of the materials provided in connection with this project. This mis- 
sion, which arrived in China in November 1941, was supported by 
lend-lease funds. 

Unfortunately, little of the equipment intended for China’s ground 
forces under this program ever reached its intended destination. 
The United States was more successful, however, in furnishing China 
with assistance in the air. Early in 1941 this Government approved 
a plan which permitted American fighter planes piloted by volunteer 
American airmen and serviced by American ground crews to fight 
against Japan in the service of China. The American Volunteer 
Group (the “Flying Tigers”), under the command of Major General 
Claire L. Chennault, was formally constituted as a unit of China’s 
armed forces by an order issued by Generalissimo Chiang Kai-shek 
on August 1, 1941. During the time that it was in existence the 
American Volunteer Group provided an effective air defense for 
southwest China and rendered invaluable assistance to hard-pressed 
Chinese and other forces in Burma. The American Volunteer Group 

* 7a For further information concerning lend-lease and the Lend-Lease Pipeline 
Agreements, see chapters V and VII. 



was disbanded in July 1942, when its personnel was incorporated into 
the United States Tenth Air Force, which had been organized in the 
China-Burma-India Theater early in 1942. In recognition of its 
increasingly important role the United States air unit in China was 
formally activated as the Fourteenth United States Air Force on 
March 10, 1943. This force kept control of the air over unoccupied 
China, engaged in expanding operations against the Japanese, and 
ably performed the vital mission of protecting the terminal bases 
of the air transport route into China. The activities of this force 
helped to maintain China’s military position and morale throughout 
the war. 

In addition to furnishing China with fighter planes and pilots, the 
United States took steps to put into effect a program for building a 
strong and well-equipped Chinese Air Force. In May 1941 an Ameri- 
can Air Mission headed by General Clagett was sent to China to 
survey the situation. Among other things, the report of the Air 
Mission recommended that a program to train Chinese pilots and 
mechanics be developed, inasmuch as China did not have enough 
men trained to fly or maintain the planes that were needed to defend 
China from Japanese air attacks. 

Because of the difficulties that would be encountered in trying to 
establish aviation training centers in China, a program was developed, 
using lend-lease funds, to implement this recommendation by train- 
ing Chinese flyers in the United States. In October 1941 the first 
group of fifty students arrived in the United States to take the stand- 
ard United States Air Force training course for pilots at Thunder- 
bird Field in Arizona. Other groups of Chinese pilots came to the 
United States for training during the war. The United States Army 
also trained Chinese aviation personnel in India. 

The program for training Chinese aviation personnel had an im- 
portant bearing on operations against Japan. In November 1943 
the formation of a Chinese- American Composite Wing of the Chinese 
Air Force was announced. This wing, composed of Chinese and 
American airmen and ground units and equipped with fighter and 
bombing planes, formed the nucleus for a strong Chinese Air Force, 
and as the Chinese personnel gained experience the American personnel 
was gradually withdrawn. 

Soon after its entry into the war, the United States, at the formal 
request of the Chinese Government, sent Lieutenant General Joseph 
W. Stilwell to China. 2 ™ In addition to being Commanding General 
of United States Forces in the China-Burma-India Theater, and of 

For the Stimson-Soong exchange of letters with respect to General Stilwell ’s 
assignment, see annex 27 (a) and (b). 



such Chinese troops as Generalissimo Chiang Kai-shek might assign 
to him, General Stilwell was also to be Chief of Staff of the Generalis- 
simo’s proposed Joint Staff — an Allied staff made up of officers repre- 
senting the United States, the United Kingdom, China, and the Neth- 
erlands. Although no Allied personnel were ever assigned to this 
Joint Staff because of the later change of attitude of the Chinese 
Government, nonetheless General Stilwell drew his formal authority 
in the Chinese military hierarchy from his continuing position as its 
Chief. General Stilwell thus served concurrently with General Ho 
Ying-chin, who was Chief of Staff of the Chinese Army, as one of 
two Chiefs of Staff to the Generalissimo. Under General Stillwell an 
extensive program for equipping and training Chinese ground forces 
was undertaken in India, and attempts were made to overcome the 
reluctance of the Chinese Government to cooperate in such a program 
in China. 

At these training centers in India large numbers of Chinese ground 
forces were equipped, through lend-lease, with the latest types of 
American weapons. Some of the personnel thus trained by American 
Army officers demonstrated their combat efficiency in operations in 
northern Burma beginning in 1943. This program provided not only 
complete tactical units but also cadres for the training of Chinese 
divisions beyond the mountains in China proper. 

Beginning in April 1943, United States Army officers, each of whom 
was a specialist in some phase of modern warfare, also operated 
training centers for Chinese officers in China. A field-artillery center, 
for example, graduated more than 5,000 officers and an infantry cen- 
ter, more than 3,000 officers by the end of the year. American officers 
also went into the field with units of the Chinese Army to serve as 
instructors, advisers, and observers; and American ordnance officers, 
with the assistance of Chinese mechanics, engaged in the work of re- 
storing worn Chinese equipment. Mention should also be made of 
the American field-hospital units which were sent to China and to 
northern Burma to aid the Chinese forces, and of United States 
Army engineers and other specialists sent to China to help improve 
communications and air-base facilities. The United States Army 
also cooperated with Chinese forces in the protection of the advancing 
Stilwell Road against Japanese attacks. 

United States military assistance up to the end of 1943 made pos- 
sible much more effective United States- Chinese combined operations, 
ground and air, on the Asian continent in the later stages of World 
War II. 270 

276 For subsequent military aid, see chapter VII. 



FINANCIAL AID 1937-1943 27,1 

United States financial aid to China, like lend-lease and other mili- 
tary assistance, antedated the Japanese attack on Pearl Harbor. The 
Secretary of the Treasury, using the United States Stabilization Fund, 
entered into stabilization agreements in 1937 and 1941 to further the 
monetary and financial cooperation of the two Governments and the 
stabilization of the United States dollar-Chinese yuan rate of ex- 
change. In an agreement of July 14, 1937, with the Central Bank 
of China, the Secretary of the Treasury agreed to purchase Chinese 
yuan up to an amount equivalent to 50 million dollars, with the proviso 
that all such yuan purchased were to be fully collateralized by gold. 
By February 1938, yuan equivalent to 48 million United States dollars 
had been purchased. Repurchase of this amount was completed by 
October 1942. 

On April 1, 1941, the Secretary of the Treasury entered into a 
second agreement with the Government of China and the Central 
Bank of China to purchase Chinese yuan up to an amount equivalent 
to 50 million United States dollars. This agreement did not provide 
for collateralization of such purchases. It was further agreed at this 
time that a Stabilization Board be established, to which the Chinese 
Government banks were to contribute 20 million dollars. Purchase of 
yuan under this agreement amounted to 10 million dollars, and was 
repaid in April 1943. 

At approximately the same time China concluded a similar agree- 
ment with the United Kingdom by which the latter extended to China 
a stabilization loan (£5,000,000) to be administered by the same Sta- 
bilization Board. Although the Sino- American and the Sino-British 
stabilization agreements were technically distinct, it had been agreed 
that all stabilization operations were to be carried on by a single Board 
composed of five members : three Chinese, one British, and one 

On July 26, 1941, only a few months after the establishment of the 
Stabilization Board, the President of the United States issued a 
freezing order under whose terms the assets of China and Japan in 
the United States were placed under the supervision of the Treasury 
Department. The freezing of Chinese funds was undertaken at the 
specific request of Generalissimo Chiang Kai-shek. The administra- 
tion of the controls with respect to Chinese assets was conducted with 
a view to facilitating the operations of the Stabilization Board and 
otherwise strengthening the foreign trade and exchange position of the 
Chinese Government. 

27,1 See annex 28 (parts a-ii). 



Besides aiding China in its efforts at currency stabilization, the 
United States extended credits to China through the Export-Import 
Bank. In general these were commodity credits which were used to 
purchase a considerable variety of American industrial and agricul- 
tural products and services. Credits aggregating 18.9 million dollars 
were authorized in 1936 and 1937. Four Export-Import Bank credits 
were granted between December 13, 1938, and November 30, 1940, 
amounting to 120 million dollars. In accordance with the agreements 
governing these four credits payment was made in large part by the 
sale to the United States of such Chinese products as tung oil, tin, 
tungsten, wolframite, and antimony. The credit had been repaid al- 
most entirely by June 30, 1949. 

Shortly after the United States became a belligerent in World 
War II President Roosevelt, in accordance with a request by the 
Generalissimo, asked the Congress to extend further financial aid 
to China. In a letter to the Congress dated January 31, 1942, the 
President declared : “Responsible officials both of this Government and 
of the Government of China have brought to my attention the existence 
of urgent need for the immediate extension to China of economic 
and financial assistance, going beyond in amount and different in form 
from such aid as Congress has already authorized. I believe that such 
additional assistance would serve to strengthen China’s position as 
regards both her internal economy and her capacity in general to func- 
tion with great military effectiveness in our common effort.” The 
President enclosed a draft of a joint resolution which he urged Con- 
gress to pass authorizing the Secretary of the Treasury, with the ap- 
proval of the President, “to loan or extend credit or give other financial 
aid to China in an amount not to exceed in the aggregate $500,000,000. ” 
The joint resolution was promptly passed by Congress and was signed 
by the President on February 7, 1942 (Public Law 442). 28 Less than 
a week later the money to implement this resolution was appropriated. 
The United States and China signed an agreement on March 21, 
1942, establishing this amount as a credit in the name of the Chinese 
Government. 284 

At the time of the extension of this credit the Japanese offensive in 
the Pacific and in southeast Asia was in full swing and land communi- 
cations with China were being severed. It was important to the 
United States that China should be strengthened and encouraged to 
continue the war against Japan. Since opportunities for giving 

28 For President Roosevelt's message to Generalissimo Chiang immediately upon 
the enactment of Public Law 442, see annex 29 (a). 

284 For a fuller treatment of this agreement, see annexes 28 and 29 (b). 



effective material aid to China, such as was being rendered to Allies 
in more accessible areas through lend-lease, were not great, the 500 
million dollar credit was characterized by the Secretary of the Treas- 
ury as the “finanial counterpart of lend-leasing war materials.” 

The funds provided under the agreement of March 21, 1942, were 
used by the Chinese Government mainly to purchase gold for sale in 
China as an anti-inflationary measure and to provide backing for the 
issuance of Chinese Government savings and victory bonds denom- 
inated in United States dollars. A total of 220 million dollars was 
withdrawn in gold, much of which was shipped to China, principally 
during 1945, to be sold internally in an effort to control inflation by 
reducing currency in circulation and keeping down the price of gold. 

A total of 200 million dollars was reserved for the redemption of 
Chinese Government securities issued in United States dollars — 100 
million dollars for payment of Chinese United States dollar savings 
certificates, and another 100 million dollars earmarked for the payment 
of Chinese United States dollar victory bonds. This earmarking was 
abandoned in 1946 and the funds became available for imports and 
other foreign payments as measures were promulgated governing pay- 
ment of foreign currency bonds held in China which provided that such 
bonds would be redeemed in Chinese currency. It was also provided, 
however, that registered bond-holders outside China would be paid in 
foreign currency. 

Of the 80 million dollar balance of this loan the sum of 55 million 
dollars was spent for the purchase of bank notes in the United States, 
and 25 million dollars for textiles imported into China. 

The Chinese Government made use of this credit entirely on its 
own initiative and discretion. Efforts had been made to incorporate 
in the agreement a clause calling for consultation regarding use of the 
credit but the United States Government acceded to strenuous objec- 
tions by the Chinese on this point. Although Chinese officials did 
offer informal assurances regarding consultation, they seldom availed 
themselves of the opportunity for United States advice in this regard 
and disregarded that which was obtained. 

A more detailed treatment of the origin and uses of this credit, and 
of other war-time financial relations between the United States and 
China, together with pertinent documents, is attached as an annex. 28b 

Final determination of the terms upon which this financial aid was 
given was deferred, under the agreement of March 21, 1942, until 
after the war. 

Mb See annex 28. 




Following the outbreak of war between the United States and 
Japan, the United States Government took a number of important 
steps which demonstrated the desire and intention of the United 
States to treat China as an equal among the Major Powers and to con- 
tribute to the strengthening of the Chinese nation. 

On October 9, 1942, the United States took the initiative and sug- 
gested to China that a treaty be negotiated providing for the relm- 
quishment of American extraterritorial rights in China and for the 
settlement of related questions. Provisions for such action had been 
included in the Sino-American Commercial Treaty of October 8, 
1903, Article XV of which had provided : 

“The Government of China having expressed a strong desire to 
reform its judicial system and to bring it into accord with that of 
Western nations, the United States agrees to give every assistance to 
such reform and will also be prepared to relinquish extra-territorial 
rights when satisfied that the state of the Chinese laws, the arrange- 
ments for their administration, and other considerations warrant 

it in so doing.” 

From that time on, it was the established policy of the United States 
to move toward relinquishment of American extraterritorial rights 
in China, but during the first quarter of the twentieth century condi- 
tions did not warrant such action. 

The question of a general relinquishment of extraterritorial juris- 
diction in China by the Treaty Powers was brought up at the Wash- 
ington Conference in 1921-1922. The Conference adopted a resolution 
providing for the establishment of a Commission “to inquire into the 
present practice of extraterritorial jurisdiction in China, and into 
the laws and the judicial system and the methods of judicial adminis- 
tration of China” with a view to making recommendations to the 
respective Governments regarding the relinquishment of extra- 
territoriality. ... 

The Commission on Extraterritoriality met in China in 1926. The 
Commission reported its findings of fact as a result of its investiga- 
tions into the practice of extraterritorial jurisdiction and into Chinese 
laws and the Chinese judicial system and recommended improve- 
ments in the Chinese legal, judicial, and prison systems. The Com- 
missioners expressed the opinion that “when these recommendations 
shall have been reasonably complied with, the several Powers would 
be warranted in relinquishing their respective rights of extrater- 
ritoriality.” Subsequently, the Chinese Government adopted a pro- 



gram with regard to the Chinese judicial system and Chinese prisons 
directed toward meeting the recommendations of the Commission. 

The United States and China entered into active negotiations in 
1930 looking toward the relinquishment of American extraterritorial 
rights in China. These discussions were far advanced when in 1931 
they were suspended as a consequence of the Japanese military occu- 
pation of Manchuria, which was followed by Japanese disruptive 
activities in China south of the Great Wall in 1932 and 1935. The 
United States was giving renewed favorable consideration to the 
question of proceeding toward a relinquishment of extraterritorial 
jurisdiction in 1937 when Japan commenced its undeclared war by 
invading North China and subsequently Central and South China. 

From the Japanese invasion of China in July 1937 until the out- 
break of war between the United States and Japan in December 1941, 
the extraterritorial system operated to the advantage of the United 
States, China, and the other countries opposed to Japanese aggressive 
activities, by providing protection for recognized treaty rights which 
the Japanese effort at monopoly violated. Although conditions did 
not favor taking active steps toward relinquishment of extraterritorial 
rights in China, the United States policy remained firm that such steps 
should be taken as soon as practicable. 

This policy was reaffirmed on several occasions by officials of the 
United States Government. In a statement to the press on July 19, 
1940, the Acting Secretary of State, Sumner Welles, said: 

“It has been this Government’s traditional and declared policy and 
desire to move rapidly by process of orderly negotiation and agree- 
ment with the Chinese Government, whenever conditions warrant, 
toward the relinquishment of extraterritorial rights and of all other 
so-called ‘special rights’ possessed by this country as by other coun- 
tries in China by virtue of international agreements. That policy 
remains unchanged.” 29 

In reply to a letter from the appointed Chinese Minister for Foreign 
Affairs, Dr. Quo Tai-chi, Secretary Hull wrote, on May 31, 1941 : 

“As you are also aware, the Government and people of the United 
States have long had a profound interest in the welfare and progress 
of China. It goes without saying that the Government of the United 
States, in continuation of steps already taken toward meeting China’s 
aspirations for readjustment of anomalies in its international rela- 
tions, expects when conditions of peace again prevail to move rapidly 
by processes of orderly negotiation and agreement with the Chinese 
Government, toward relinquishment of the last of certain rights of 

** See annex 30. 



a special character which this country, together with other countries, 
has long possessed in China by virtue of agreements providing for 
extraterritorial jurisdiction and related practices.” 80 

The question of the relinquishment of extraterritorial jurisdiction 
in China was included in the informal conversations between the 
United States and Japan during 1941. The outline of a proposed 
basis for agreement between the two countries which the Secretary 
of State handed to the Japanese Ambassador on November 26, 1941, 
contained the following provision : 

“5. Both Governments will give up all extraterritorial rights in 
China, including rights and interests in and with regard to interna- 
tional settlements and concessions, and rights under the Boxer 
Protocol of 1901. 

“Both Governments will endeavor to obtain the agreement of the 
British and other governments to give up extraterritorial rights in 
China, including rights in international settlements and in conces- 
sions and under the Boxer Protocol of 1901.” 

Immediately after the outbreak of war between the United States 
and Japan in December 1941, all energies were directed toward the 
prosecution of the war. While the United Nations were suffering 
serious military reverses in the Far East it was felt that any action 
toward relinquishment of extraterritorial jurisdiction in China would 
have been interpreted widely as a gesture of weakness. Even before 
the tide of battle in the Pacific turned in favor of the United Nations, 
however, the United States in the spring of 1942 started to give active 
consideration to the question of relinquishing extraterritoriality in 
China before the termination of hostilities. 

After the Japanese thrusts into the Central and Southwest Pacific 
had been halted and United Nations forces were on the offensive in 
the Pacific and Chinese theaters, the United States took the initiative 
and suggested to the Chinese Government on October 9, 1942, that a 
treaty be concluded to provide for the relinquishment by the United 
States of extraterritorial and related rights in China. On October 24, 

1942, the Secretary of State handed the Chinese Ambassador in Wash- 
ington a draft text of the proposed treaty. Following negotiations 
between the two Governments, the treaty was signed on January 11, 

1943, and became effective with the exchange of ratifications on May 
20, 1943. 81 This treaty, together with a similar Sino-British treaty 
which was negotiated at the same time, was warmly approved by 
Chinese leaders. 

80 See annex 31. 

81 See annex 32. 




As a further indication of American policy, the President, on Decem- 
ber 17, 1943, signed an Act, which had been passed by large majorities 
of both Houses of Congress, removing long-standing legislative dis- 
criminations against Chinese. The Act repealed the Chinese ex- 
clusion laws, established an annual Chinese immigration quota, and 
made legally admitted Chinese eligible to naturalization as American 
citizens. The enactment of this legislation had been specifically 
recommended by President Roosevelt in order to “correct an historic 
mistake” and give “additional proof that we regard China not only 
as a partner in waging war but that we shall regard her as a partner 
in days of peace.” 


American recognition of the status of China as one of the Great 
Powers was demonstrated on two other occasions in the fall of 1943. 
The United States insisted that China be included as a signatory, 
together with the United Kingdom, the U.S.S.R., and the United 
States, of the Declaration of Four Nations on General Security, signed 
in Moscow on October 30, 1943, which recognized the right and 
responsibility of China to participate jointly with the other great 
powers in the prosecution of the war, the organization of the peace, 
and the establishment of machinery for post-war international co- 
operation . 32 The Cairo Declaration, issued on December 1 , 1943, by 
President Roosevelt, Prime Minister Churchill, and Generalissimo 
Chiang Kai-shek, following their meeting at Cairo, Egypt, in the 
latter part of November 1943, declared their “purpose” that “Man- 
churia, Formosa, and the Pescadores shall be restored to the Republic 
of China .” 33 On his return from the Cairo Conference President 
Roosevelt could say, in his Christmas Eve message to the Nation: 
“Today we and the Republic of China are closer together than ever 
before in deep friendship and in unity of purpose.” 

82 Subsequently China participated as a Great Power in the Dumbarton Oaks 
conversations in the summer and fall of 1944, and was one of the sponsoring 
Powers of the United Nations Conference on International Organization, which 
met at San Francisco in 1945, and which formulated the Charter of the United 
Nations. The Charter granted China a permanent seat on the Security Council. 

“ See annex 33. 


A Review of Kuomintang- Chinese 
Communist Relations, 1921-1944 


Various internal factors arising from or influencing the course of the 
Chinese revolution have played a major role in the growth and devel- 
opment of American policy toward China. The rise of Asiatic nation- 
alism, the impact of the West, the loss by the decadent Ch’ing Dynasty 
of what the Chinese call the “Mandate of Heaven,” and the consequent 
struggle for succession to power have all been factors which inevitably 
modified and conditioned the efforts of the United States to conduct its 
relations with China in accordance with its traditional policies out- 
lined in chapter I. 

It is impossible here to analyze all these factors ; but it is necessary 
at this point, if one is to understand the course and purposes of Ameri- 
can actions in China since 1944, to pause and review at least in outline 
the long and tortuous relationship between the Kuomintang and the 
Chinese Community Party. This struggle for the acquisition and re- 
tention of power has played a major role in the internal Chinese scene 
for a quarter of a century, even at the expense of the prosecution of the 
war against Japan ; it has been utilized by Major Powers in the pursuit 
of their own objectives and rivalries and in turn has affected them; 
and it has been a significant influence on the course of relations be- 
tween China and the various Powers. In the crowded events of the 
last few years and the bitter readjustments of the postwar period it is 
easy to forget the origins and development of the Kuomintang-Com- 
munist struggle for supremacy ; but they must be recalled if one is to 
understand and place in proper perspective the course of American 
policy since V-J Day. This struggle has had a great effect on Ameri- 
can actions and attitudes. 



The ideological basis of the Kuomintang was formulated by Dr. 
Sun Yat-sen during his years of conspiracy against the Manchu 



regime and was elaborated in various of his writings after the 1911 
revolution. Dr. Sun tried to make use of Western thought while con- 
structing a solution specifically for China which would retain what he 
thought valuable in the Chinese tradition. His program has con- 
tinued to form the theoretical basis of Kuomintang political thought. 

Dr. Sun conceived of the Chinese revolution as taking place in three 
distinct stages: (1) military unification, (2) “political tutelage” and 
(3) constitutionalism. 1 The first stage was to be a period of military 
dictatorship. As soon as order should be restored, the second stage was 
to begin, during which the people were to be trained by the Kuomin- 
tang in the exercise of their political rights. Finally, the third stage 
of constitutional government was to be reached and the revolutionary 
process completed. 

The long-term program that Dr. Sun Yat-sen hoped to put into 
effect in China was detailed in many of his writings, of which the Sm 
Min Chu-I, the “Three Principles of the People,” is the best known. 
Briefly, his “Three Principles,” are : (1) min ts’u, or “people’s national- 
ism,” under which China would regain her national integrity and 
cultural unity; (2) min chSuan, or “people’s democracy,” under which 
the people would exercise the “four political powers” (suffrage, recall, 
initiative and referendum), by which they control the government, 
which in its turn exercises the “five governing powers” (legislative, 
judicial, executive, “examination” and censorial) ; and (3) min sheng , 
or “people’s livelihood,” a form of socialism involving equalization 
of land ownership, regulation of capital and avoidance of the class 

Although Dr. Sun was impressed by the Bolshevik success in 1917 
and although he accepted the tactical aid and advice of the Third 
International, he never subscribed to Communist ideas such as the 
class struggle; indeed, he stressed repeatedly that the class struggle 
could and should be avoided in China. Dr. Sun invited and accepted 
the aid and collaboration of the U.S.S.R., the Third International and 
the Chinese Communist Party only with the expressed understanding 
that “the Communist order or even the Soviet System cannot actually 
be introduced into China” 2 and that “in joining the Kuomintang, 

1 Sun Yat-sen, “Outline [Fundamentals] of National Reconstruction” ( Chien 
Kuo Ta Kang), given in Leonard Shih Lien-hsu, Sun Yat-sen: His Political and 
Social Ideas (Los Angeles, 1933), and in Arthur N. Holcombe, The Chinese Revo- 
lution (Cambridge, 1930). 

* Joint statement by Sun Yat-sen and Adolph Joffe, representative of Soviet 
Russia, in Shanghai, January 1923. See Chinese Ministry of Information, China 
Handbook , 1937-1945 (official publication of the Ministry of Information of 
the Kuomintang) (New York, The Macmillan Company, 1947), p. 66. 



Communists of the Third International are to obey Kuomintang 
discipline .” * 3 


The Chinese Communist program for the Chinese revolution is based 
on the Leninist theories of imperialism and revolution in semi-colonial 
countries. Although the theories have undergone changes at the hands 
of men like Mao Tse-tung, Chairman of the Central Committee of the 
Chinese Communist Party, basically they correspond to the orthodox 
concepts of Lenin and Stalin. Innovations introduced by Chinese 
Communist theoreticians have concerned details of the revolutionary 
time-table and not basic revolutionary principles. The long-term 
objectives of Chinese Communism are the orthodox Marxian goals of 
socialism and, ultimately, the classless, communist society. 

In all countries the “bourgeois-democratic revolution” is considered 
by the Leninist theory to be “progressive” within certain limits, and 
even to be a prerequisite of eventual socialist revolution. The first 
objective of revolution in a colonial or semi-colonial country, however, 
is what the Communists call the liberation of the country from im- 
perialism and feudalism. During this period even the development 
of capitalism is “progressive” but as the “bourgeois-democratic revo- 
lution” progresses, inherent class antagonisms will come to the fore 
and the bourgeoisie will come to ally itself with imperialism and 
feudalism against the working class. At this point, according to Lenin, 
collaboration between the bourgeoisie and the working class must cease. 
In a frequently quoted passage Lenin said : 

“The Communist International should form temporary understand- 
ings , even alliances , with the bourgeois democracy of the colonies and 
the backward countries, but not merge with it, unconditionally pre- 
serving the independence of the proletarian movement, even in its 
most embryonic form . . . We, as Communists, must and will support 
bourgeois emancipation movements in the colonial countries only in 
those cases when these movements are really revolutionary, when their 
representatives will not hinder us in educating and organizing the 
peasantry and the large masses of the exploited in the revolutionary 
spirit .” 4 

The Chinese Communist advocacy of democracy during the early 
stages of the Chinese revolution must be considered in terms of the 

8 Statement by Li Ta-chao, one of the top-ranking Chinese Communists, itod., 

p. 66. 

4 E. Burns, Handbook of Marxism (New York, 1935), p. 896. The concluding 
sentence is used by Liu Shao-ch’i in his pronouncement “On Nationalism and 
Internationalism,” broadcast by the Chinese Communist North Shensi radio, Nov. 
9 and 10, 1948. Italics as given in Burns, op. cit. 



theory of “New Democracy” as propounded by Mao Tse-tung accord- 
ing to the Leninist formula. The Communist party, he wrote, has a 
role to perform even during the “bourgeois-democratic” stage of the 
Chinese revolution : 

“The first stage of this revolution in colonial and semicolonial coun- 
tries — though according to its social nature, it is fundamentally still a 
bourgeois-democratic one, of which the objective requirements still 
basically call for the clearance of the way to capitalistic development — 
yet, despite this, this revolution is no longer the old, wholesale bour- 
geois-led revolution for the building of capitalist society and a state 
of the bourgeois-dictatorship type, but a new type of revolution, wholly 
or partly led by the proletariat, the first stage of which aims at the 
setting up of a new democratic society, a new state of the combined dic- 
tatorship of all classes. The fundamental character of this revolu- 
tion will never vary until the arrival of the stage of Socialist revolu- 
tion, though during its progress, it may pass through several minor 
stages in accordance with the possible changes in the attitude of 
enemies and allies .” 5 

The tactics to be followed by the Chinese Communist Party during 
the early stages of the revolution are implicit in the Communist anal- 
ysis of the nature of the “bourgeois-democratic revolution.” The 
Communist Party will in theory ally itself with such parties, groups, 
or classes as it considers “progressive,” in order to hasten the revolu- 
tion against feudalism and imperialism. But the great fear of the 
Communist Party is that it may lose the initiative and the leadership 
in the revolution to nationalists, reformers, or social-democrats. Com- 
munist tactics in China have steered a precarious course between the 
danger of “right opportunism,” through which the initiative is lost, 
and that of “left extremism,” which, according to Communist thinking, 
prematurely attempts to turn the “bourgeois-democratic revolution” 
into a socialist revolution and thus causes the Communists to lose 
their influence in the “bourgeois” revolution before the socialist revolu- 
tion can be successfully prosecuted. 


The first Communist groups in China were formed in Peking in 1919 
and 1920 by Ch’en Tu-hsiu and various students, among whom was 
Mao Tse-tung. In 1920 at Baku, the Comintern convened a “Congress 
of Oriental Nations,” at which China was represented. In May 1921 

5 Mao Tse-tung, “China’s New Democracy,” 1940, is included in the appendix to 
The Strategy and Tactics of World Communism , Supplement III (H. Doc. 154, 
part 3, 81st Cong., 1st sess.). 



the foundation meeting of the Chinese Communist Party was convened 
in Shanghai by Ch’en Tu-hsiu and Li Ta-chao. During the following 
months the Chinese Communist Party was organized in various 
provinces and cities in China. Other Chinese Communist Groups were 
formed among Chinese students in France, Germany, Russia and 
Japan. In 1923 the Third Congress of the Communist Party met in 
Canton and, in accordance with a previous decision of the Comintern, 
decided to enter the Kuomintang and create a “united front” against 
the northern militarists. 


Meanwhile Dr. Sun Yat-sen, whose appeals for foreign aid had 
gone unanswered except by Russia and whose attempts to unify China 
through alliances with southern war-lords had ended in his being 
forced to flee from Canton to Shanghai, was carrying on discussions 
with Adolph Joffe, a representative of Russia. In January 1923 
Dr. Sun and Joffe issued a joint statement setting forth the principles 
under which Russia and the Communist International were to aid the 
Chinese revolution during the ensuing years : 

“Dr. Sun Yat-sen holds that the Communist order or even the 
Soviet system cannot actually be introduced into China because there 
do not exist here the conditions for the successful establishment of 
either communism or sovietism. This view is entirely shared by Mr. 
Joffe, who is further of the opinion that China’s paramount and most 
pressing problem is to achieve national unification and attain full 
national independence, and regarding this task, he has assured Dr. 
Sun Yat-sen that China has the warmest sympathy of the Russian 
people and can count on the support of Russia.” 8 

In partial fulfillment of this pledge of aid to Dr. Sun Yat-sen, 
Michael Borodin was sent to Canton in September 1923. Borodin 
quickly became the principal Kuomintang adviser. Under his direc- 
tion the Kuomintang was reorganized at the First National Party 
Congress in January 1924 along the lines of the Russian Communist 
Party with centralized control extending from headquarters into the 
smallest subdivisions. The Kuomintang was now able to function 
with disciplined efficiency for the first time in its history. At the same 
Congress it was resolved that Communists who were willing to take 
an oath of obedience to the Kuomintang authorities and who accepted 
the principles of the Kuomintang should be admitted to the Party as 
individuals. Li Ta-chao declared in this connection: 

• China Handbook, 1937-1945, p. 66. 


“In joining the Kuomintang, communists of the Third Interna- 
tional are to obey Kuomintang discipline and to participate in the na- 
tional revolution. They have not the slightest intention of turning 
the Kuomintang into a communist party. Those Communists who join 
the Kuomintang do so as individuals and not on a party basis.” 7 

The objectives of the Kuomintang-Communist collaboration were 
declared to be the elimination of feudalism (i. e. at that time, the 
regime of the northern militarists) and the unification of the country 
so that China would be able to stand up against foreign Powers on a 
basis of equality. 

TION, 1924-1927 

In collaboration with the Communists and the Comintern advisers, 
the Kuomintang was able to accomplish a shift from the tactics of con- 
spiracy it had previously employed to those of revolution. The Kuo- 
mintang assumed the leadership over the new forces that had been un- 
leashed by the spread of nationalism in China. Through the use of 
propaganda among the peasant and working masses, the Kuomintang 
was able to turn its military campaigns into popular uprisings. Its 
army was put under the leadership of officers trained according to 
Soviet methods at the newly established Whampoa Academy, and 
achieved a degree of efficiency never before equaled in modern China. 

Following the death of Dr. Sun Yat-sen in 1925, General Chiang 
Kai-shek, director of the Whampoa Academy, became the leading 
figure in the Kuomintang. In 1926 he commanded the “Northern Ex- 
pedition,” a campaign to unify China by destroying the power of the 
warlords in the north. The revolutionary forces, preceded by propa- 
ganda corps, made rapid progress, and toward the end of the year the 
Kuomintang capital was established at Hankow. A split in the party 
between the left wing at Hankow and the right wing under the leader- 
ship of General Chiang, however, was becoming increasingly evident. 
The latter was anxious to obtain the support of the middle classes, 
particularly the commercial and banking community of Shanghai, 
while the Communists were attempting to turn the Nationalist revolu- 
tion into social revolutionary channels. In April 1927 the Generalis- 
simo set up a government at Nanking rivaling that of the left faction of 
the Kuomintang which had gained dominance in Hankow. Follow- 
ing the capture of Shanghai in March 1927 he carried out a purge of 
the Communists in Shanghai, and somewhat later conducted a similar 

1 IMd p. 66. 



one in Canton. These purges involved several hundred thousand 
deaths. It should also be remembered that leading figures on both 
sides were still in comparable positions twenty years later, which 
inevitably added great personal bitterness to the other factors which 
complicated the later negotiations. 

Meanwhile the position of Borodin and the Communists in Hankow 
was becoming more difficult. Conflicting and ill-advised orders from 
Moscow, which was at the time in the throes of the Stalin-Trotsky 
controversy, did not help the position of the Communists. The crisis 
was precipitated when the Kremlin forced the Chinese Communists 
to demand majority control of the Kuomintang and separate workers 
and peasant armies. Borodin knew better than to present such a 
demand, but Roy, the Indian watchdog of the Third International, 
went over his head. By July, the Communist cause had collapsed and 
Borodin was forced to retire from China, while purges of the Com- 
munist element in Hankow were being carried out. 

IY. CIVIL WAR, 1927-1936 

Although the Communists had been expelled from both wings of the 
Party, unity within the Kuomintang was not restored until February 
1928 when the Party was reorganized under the control of General 
Chiang Kai-shek. In June 1928 Kuomintang forces took Peking, 
completing the official unification of China and destroying the power 
of the northern warlords. After 1927, the principal obstacle to sta- 
bility in China was the existence of Chinese Communist districts and 
troops in open rebellion against the National Government of China. 

Once they had been purged from the cities and had lost their prole- 
tarian base, the Communist leadership concentrated on a small area in 
south Kiangisi which remained the remnant of a much larger South 
China peasant base. Since the economy of this area was wholly agrar- 
ian, Communist tactics shifted to exploitation of peasant difficulties. 
This was the forerunner of later Communist expansion and successes. 
It also represented the triumph of the Mao Tse-tung faction which 
opposed the urban policy of Li Li-san and favored an agrarian em- 
phasis. Li Li-san, who had gone to Moscow, was not to return to 
prominence until the Russian army brought him to Manchuria in 1945. 

In five major “bandit suppression campaigns,” starting in Decem- 
ber 1930 and lasting until 1935, the Generalissimo attempted to ex- 
terminate the Communist forces in China. These campaigns were 
launched as follows: (1) December 1930, under Lu Ti-p’ing; (2) May 
1931, under Ho Ying-ch’in; (3) June 1931, under Chiang Kai-shek; 


(4) April 1933, under Ch’en Ch’eng; (5) October 1933, under Chiang 

The fourth and particularly the fifth campaigns were planned with 
the assistance of the German military advisers Von Seeckt and after 
him Von Falkenhausen. Hundreds of thousands of troops were mo- 
bilized by the Nationalists. The campaigns did not succeed in exter- 
minating the Communists, but the Generalissimo was able to dislodge 
them from their bases in southern China, forcing them to flee to a 
base in the northwest in the a long march” of 1934-1935. An incidental 
effect of the anti-Communist campaigns was the consolidation of Na- 
tionalist political control over many of the provinces that had pre- 
viously maintained a degree of regional autonomy. 




While the National Government was engaged in the problem of 
suppressing Communism, Japan embarked upon a series of encroach- 
ments on Chinese territory, beginning with occupation of Manchuria 
in 1931 and leading up to the Marco Polo Bridge incident on July 
7, 1937. 

The Japanese actions aroused large sectors of Chinese opinion. The 
effect of this aggression was similar in many ways to the effect of the 
earlier Twenty-one Demands and the insistence by Japan at the Paris 
Peace Conference that it be ceded the German rights in the Shantung 
peninsula. Again there was an upsurge of nationalism, particularly 
after 1935, when the loss of the northern provinces was threatened. 
The revival of patriotism included most of politically conscious 
China — elements ranging from warlords to students. Resistance 
against Japanese aggression became a popular slogan exploited not 
only by leftist intellectuals, such as those united in the National Salva- 
tion League, but also by dissident militarists. 

The Chinese Communists had declared “war” on Japan as early as 
1932 while their main force was still concentrated in Kiangsi, hundreds 
of miles from the nearest Japanese troops. 8 Although demands for 
a “united front” became a factor in the Communist propaganda, the 
Chinese Communist Party at first offered no concessions to other 
groups to make possible a true “united front” but insisted on retaining 

8 See the “Circular Telegram of the Provisional Central Government of the 
Soviet Republic of China Declaring War Against Japan/’ given in V. A. Yakhontoff, 
The Chinese Soviets (New York, 1934), pp. 236-38. 



full control over any anti-Japanese coalition. In 1935 the Seventh 
World Congress of the Comintern officially proclaimed the new policy 
of the “united front” and offered the cooperation of Communist parties 
to other groups willing to fight fascism. At that time, the Chinese 
Communist Party was criticized because it had “not yet succeeded in 
carrying out these tactics [of the united front] really consistently 
and without mistakes,” and because the concept of the “united front” 
had not been broad enough. The Chinese Communist Party was spe- 
cifically censured for failing to unite with the dissident anti- Japanese 
militarists who had rebelled against the Nanking government in 
Fukien Province in 1933. 10 Following the Congress, the first serious 
offers of a “united front” were made to the Kuomintang. In January 
1936 s the Chinese Communist Party publicly offered the “hand of 
friendship” to Generalissimo Chiang Kai-shek if he would take up 
arms against Japan. On August 26, 1936, the Chinese Communist 
Party proclaimed to the Kuomintang, “we are prepared to form a 
strong revolutionary united front with you as was the case during . . . 
the great Chinese Revolution of 1925-1927 . . . [that] is the only 
proper way to save our country today.” 

Coming at a time of growing patriotic resentment against Japanese 
aggression, the stepped-up demands for a “united front” by the Chinese 
Communist Party were an effective propaganda weapon for use against 
the troops to which the National Government had assigned the task 
of “bandit suppression” in northwest China. By the end of 1936 the 
army of Chang Hsueh-liang, the former warlord of Manchuria, was 
in no mood to fight against the Communist forces. In December 1936 
the Generalissimo and his staff visited Sian in Shensi Province to map 
out a sixth “Bandit Suppression” campaign. Rather than carry out 
Nationalist orders to resume operations against the Communists, 
Chang Hsueh-liang decided to “arrest” the Generalissimo. In this 
move he was acting in league with the commander of the “Hsipei” 
(Northwestern) troops, Yang Hu-ch’eng, and the subordinate com- 
manders of both the Hsipei army and his own “Tungpei” (Manchur- 
ian) army. 

On the day of the coup the commanders of the “Tungpei” and 
“Hsipei” armies issued a circular telegram stating the demands of 
“national salvation,” consisting of eight points : reorganization of the 
Nanking government and admission of parties to share the joint re- 
sponsibility of national salvation; end of the civil war and armed 
resistance against Japan ; a release of the leaders of the patriotic move- 

10 Wang Ming, The Revolutionary Movement in the Colonial Countries, Report 
to the VII World Congress of the Communist International , August 7, 1935 (New 
York, 1935). 


ment in Shanghai; pardon of all political prisoners; a guarantee of 
liberty of assembly; safeguard for the people’s rights of patriotic 
organization and political liberty ; putting into effect the will of Dr. 
Sun Yat-sen; and convening a National Salvation Conference. 11 

These points corresponded generally to a program of “national 
salvation” advocated by the Communist Party in a telegram issued 
earlier in December. They also resembled a manifesto issued by the 
“All-China Federation of National Salvation” on May 31, 1936. 

The details of the Sian incident have been obscured by the personal 
considerations involved in the available accounts. According to one 
version, Chang Hsueh-liang and some of his associates considered the 
Generalissimo their leader and merely wished to awaken him to the 
danger of Japanese aggression, although other more radical officers 
of the “Tungpei” army favored executing him. The Chinese Com- 
munist Party, whose representatives were called to Sian immediately 
after his capture, at first favored the execution of the Generalissimo, 
but, apparently on orders from Moscow, shifted to a policy of saving 
his life. The Chinese Communist concept, inspired from Moscow, 
became one of promoting a “united front” with the Generalissimo and 
the National Government against the Japanese; this concept seems to 
have played a considerable role in saving the life of the Generalissimo. 
At any rate, on December 25, 1936, the Generalissimo returned to Nan- 
king, accompanied by his captor Chang Hsueh-liang, who expressed 
sentiments of repentance. It seems certain that no agreement between 
the Generalissimo and the Communist or Tungpei leaders was signed. 
It seems equally certain, however, that an understanding of some kind 
was reached by the groups involved. After the Sian incident the 
establishment of an entente between the Chinese Communists and the 
Kuomintang moved rapidly ahead. 12 

The wartime entente between the Kuomintang and the Chinese 
Communist Party was never formalized .by a written alliance, but 
rested upon a series of parallel documents issued by the two parties, by 
which the Kuomintang announced the change in Chinese Government 
policy from one of military suppression of communism to that of 
seeking a political settlement, and by which the Chinese Communist 
Party proclaimed the abandonment of forceful insurrection and sovi- 
etization in favor of cooperation with the Government against Jap- 
anese aggression. These documents are (1) the telegram from the 

11 See annex 34. 

“A first-hand account of the Sian incident is given in Mme. Mei-ling (Soong) 
Chiang, China at the Crossroads ; an Account of the Fortnight in Sian , when the 
Fate of China Hung in the Balance (London, Faber and Faber, 1937) . This work 
was also published with varying titles in New York and Shanghai. 



Central Committee of the Chinese Communist Party to the Third 
Plenary Session of the Kuomintang Central Executive Committee on 
February 10, 1937 ; (2) the resolution of February 21, 1937 of the Third 
Plenary Session of the Kuomintang Central Executive Committee; 
(3) the manifesto of September 22, 1937 by the Central Committee 
of the Communist Party; and (4) the statement on the following day 
by Generalissimo Chiang Kai-shek commenting on the Communist 


Shortly after the return of the Generalissimo from Sian, the Third 
Plenary Session of the Fifth Central Executive Committee of the 
Kuomintang was held in Nanking. On February 10, 1937, five days 
before the session opened, the Central Committee of the Chinese Com- 
munist Party addressed a telegram to the session which recommended 
a program including the suspension of civil war and the concentration 
of the national strength against external aggression, a guarantee of 
civil rights, the calling of a “national salvation” conference, the prep- 
aration for armed resistance and improvement in living conditions 
of the people. If these points were approved, the Communist Party 
declared itself prepared to make certain alterations in the policies 
that had characterized its activities : 

1. to stop the program of armed uprisings throughout the country 
for the overthrow of the National Government in Nanking; 

2. to change the Chinese Soviet Government into the Government of 
the Special Region of the Republic of China and the Red Army into the 
National Revolutionary Army under the direct leadership of the 
Military Affairs Commission in Nanking; 

3. to enforce the democratic system of universal suffrage within 
the special regions under the regime of the Government of the Special 
Regions ; 

4. to put an end to the policy of expropriating the land of the 
landlords and to execute the common program of the anti- Japanese 
united front. 13 

The question of reconciliation with the Communists was dealt with 
at length by the Third Plenary Session in a resolution passed on 
February 21, 1937. The resolution reviewed the original leniency of 
Sun Yat-sen in admitting Communists to the Kuomintang in 1924 

13 Text in New China (Yenan, Mar. 15, 1937). See annex 35. 


and their “subsequent treasonable and rebellious activities” up to the 
time of the session, when the “Communist bandits, reduced to straits 
in the Northwest, have begun to announce alleged willingness to sur- 
render.” The resolution stated that the Kuomintang would give the 
Communists a chance to “reform” on four conditions : 

1. Abolition of the separate army and its incorporation into the 
united command of the nation’s armed forces. 

2. Dissolution of the so-called “Chinese Soviet Republic” and simi- 
lar organizations and unification of the government power in the 
hands of the National Government. 

3. Absolute cessation of Communist propaganda and acceptance of 
the Three People’s Principles. 

4. Stoppage of the class struggle. 14 

These points corresponded closely to the changes in policy the 
Communist Party had declared itself willing to make. After having 
laid down the conditions on which the Communists would be per- 
mitted to “start life anew”, the session in its closing manifesto blamed 
the Communists for terroristic activities since 1927, “thus undermining 
the nation’s strength which otherwise would have been employed in 
resisting the invader.” The cardinal policy of the Kuomintang was 
declared to be the eradication of the Communist scourge. However, 
the achievement of unity through peaceful means was to be the guiding 
principle, although the Chinese people were warned against the 
fallacious theories of the class struggle. 15 

These documents established the basic conditions for the entente. 
During the ensuing months negotiations betwen the parties continued. 
Chou En-lai held discussions with the Generalissimo and other 
Kuomintang officials at Ruling, summer capital of China. Other 
meetings were held within Chinese Communist territory. 

Many of the conditions of the entente were implemented during the 
course of the negotiations. The civil war ceased. The Com- 
munist policies of land confiscation were suspended, and Communist 
propaganda was preparing the people for the united front. The 
Kuomintang was making active preparations for increased democra- 
tization, including the calling of a People’s National Congress for 
November 1937 to inaugurate a new constitution. 16 Many, though 
by no means all, of the political prisoners held by the Kuomintang 
were released. 

14 The China Year Book , 1988 , pp. 532, 470; China Handbook, 1987-1945, p. 66. 

15 China Handbook, 1987-1945, p. 66. 

- 18 Because of the war and repeated postponements this Congress did not meet 
until November 1946. 



22, 1937 

Apparently public announcement of the entente was originally 
scheduled for the middle of July 1937, when a Chinese Communist 
manifesto was handed to the Kuomintang, declaring that Chinese 
unity had been restored for the purpose of resisting Japan. Publica- 
tion of the manifesto was delayed until September 22, 1937, because of 
the outbreak of hostilities with Japan after the Marco Polo Bridge 
incident of July 7, 1937. 

The manifesto of the Central Committee of the Communist Party, 
published on September 22, 1937, stated that the Communist Party had 
“on the basis of peace and national unity and joint resistance against 
foreign aggression, reached an understanding with the Kuomintang” 
and proposed the following objectives: 

“(1) Struggle for the independence, liberty and emancipation of 
the Chinese nation by promptly and swiftly preparing and launching 
the national revolutionary campaign of resistance. . . . 

“(2) Enforce democracy based on the people’s rights and convoke 
the National People’s Congress in order to enact the Constitution and 
decide upon the plans of national salvation. 

“(3) Improve the well-being and enrich the livelihood of the 
Chinese people. . . 

The manifesto expressed the belief that the whole country would 
support these objectives, although the program would meet with 
numerous difficulties, particularly from Japanese imperialism, and 
declared : 

“(1) The San Min Chu-I enunciated by Dr. Sun Yat-sen is the 
paramount need of China today. This Party is ready to strive for 
its enforcement. 

“(2) This Party abandons its policy of overthrowing the Kuomin- 
tang of China by force and the movement of sovietization, and dis- 
continues its policy of forcible confiscation of land from landowners. 

“(3) This Party abolishes the present Soviet Government and will 
enforce democracy based on the people’s rights in order to unify the 
national political machinery. 

“(4) This Party abolishes the Red Army, reorganizes it into the 
National Revolutionary Army, places it under the direct control of 
the National Government, and awaits orders for mobilization to share 
the responsibility of resisting foreign invasion at the front.” 17 

1T Full text given in annex 36. 


SEPTEMBER 23, 1937 

On September 23, 1937, the day following the publication of the 
Communist manifesto, the Generalissimo issued a formal statement 
welcoming the change in Communist policies : 

“The Manifesto recently issued by the Chinese Communist Party 
is an outstanding instance of the triumph of national sentiment over 
every other consideration. The various decisions embodied in the 
Manifesto, such as the abandonment of a policy of violence, the cessa- 
tion of Communist propaganda, the abolition of the Chinese Soviet 
Government and the disbandment of the Red Army are all essential 
conditions for mobilizing our national strength in order that we 
meet the menace from without and guarantee our own national 

“These decisions agree with the spirit of the Manifesto and resolu- 
tions adopted by the Third Plenary Session of the Kuomintang. The 
Communist Party’s Manifesto declares that the Chinese Communists 
are willing to strive to carry out the Three Principles. This is ample 
proof that China today has only one objective in its war efforts.” 18 


During 1937 and 1938 a number of concrete steps were taken to 
implement the entente and to further the united resistance against 
the Japanese invasion. By order of the National Government the 
Chinese Communist Army was reorganized as the Eighth Route Army, 
and later into the 18th Group Army, with the Communist generals Chu 
Teh and P’eng Te-huai as commander and vice-commander, and Lin 
Piao, Ho Lung, and Liu Po-ch’eng as division commanders. The 
Eighth Route Army was designated to garrison the area of the Shensi- 
Kansu-Ninghsia (Shen-Kan-Ning) border region, the former Com- 
munist area. Shortly afterwards the Communists, whose area of con- 
trol was expanding as a result of their guerrilla warfare efforts, 
established the Shansi-Chahar-Hopei (Chin-Cha-Chi) border region 
government under the National Government. The Chin-Cha-Chi 
regional government received the sanction of the National Government 
in J anuary, 1938 ; it was the only Communist-dominated local govern- 
ment to receive such formal sanction. During the first three years of 
the entente the Communist armies received a monetary subsidy from 
the National Government, as well as a small allotment of ammunition. 

In addition the National Government carried out a number of 
measures regarding civil rights and greater democratization, although 

“ Full text in annex 37. 



due to wartime conditions it did not call the National Assembly into 
session to act on a new Chinese constitution. The Communist Party 
was permitted to publish its own newspaper, the Hsin Hua Jih-Pao 
(New China Daily ) in Hankow. 18a Chou En-lai was one of the seven- 
teen members of the presidium of the Extraordinary National Congress 
of the Kuomintang in March 1938 and was appointed Vice-Minister 
of the Political Training Board of the National Military Council, a 
position he held until 1940. 

Among the more important steps towards increased democracy aAd 
freedom of discussion taken by the Kuomintang during this period was 
the creation by the Extraordinary National Congress of the Kuomin- 
tang in March 1938 of the People’s Political Council (PPC), with 
powers to discuss and question all important Government measures and 
to make proposals to the Government. Although the People’s Political 
Council was purely advisory, the prestige of its members and the 
caliber of its discussions made it a significant body. 

The most important policies of this period are embodied in the 
“Program of Armed Resistance and National Reconstruction,” which 
was adopted by the Kuomintang Party Congress on April 1, 1938, and 
subsequently by the People’s Political Council. The “Program” was 
accepted by both the Kuomintang and the Chinese Communist Party 
as the basic outline of principles to be followed by the wartime entente, 
subsidiary only to the San Min Chu-I (Three People’s Principles). 19 
The Program pledged China to play a just role in world affairs, urged 
intensified military activity, called for governmental reforms, in- 
creased economic growth and the organization of the people. 

The period during which the National Government was located at 
Hankow marked the high point of Kuomintang-Communist coopera- 
tion. In spite of continued defeats of the Chinese armies by Japan, 
the solidarity of the Chinese people created a spirit of optimism. The 
Generalissimo emerged as the symbol of national unity and of eventual 


In the latter half of 1938 relations between the Kuomintang and the 
Chinese Communist Party began to deteriorate. At the end of August 
the Hankow- Wuchang Defense Headquarters outlawed three Com- 
munist-sponsored mass organizations because it feared the Com- 
munists would use them to gain influence in Nationalist territory. 

188 This Communist paper continued to be published in Nationalist territory 
throughout the war. 

19 Text is given in China Handbook, 1987-1945, pp. 61-62. 


After the fall of Hankow in October 1938 Communist-Kuomintang 
relations worsened steadily. More Communist organizations were 
suppressed. The Communists were attacked for failing to yield con- 
trol over their area in Shensi Province to the National Government, 
and for not allowing the National Government to exercise direct com- 
mand over the Communist armies in the field and to direct their 

In the following years relations between the two parties remained 
strained, and charges and countercharges of failure to abide by the 
promises of 1937 became increasingly violent, often leading to local 
clashes between Chinese National and Communist forces. The one 
policy common to both parties was resistance against the Japanese 
invasion, and even this was often neglected amid the jockeying for 
advantage between the two parties. However the resumption of open 
hostilities on a large scale was avoided. During 1939 the National 
Government, at that time located in Chungking, began to enforce a 
rigid military blockade of the Communist areas to prevent Communist 
infiltration into Nationalist China. The expansion of Communist 
military forces into areas outside the regional defense zones assigned 
them by the National Government led to incidents and continuous 
skirmishes between the Communists and Nationalists. The arguments 
and fighting over the demarcation between Communist and Nationalist 
military zones culminated in the “New Fourth Army Incident” of 
January 1941, the most serious wartime clash between Nationalist 
and Communist armies and the real beginning of civil strife. The 
fighting reached such proportions that it received world-wide atten- 
tion. The Government version of the incident was that it had issued 
orders for the Communist New Fourth Army to move north of the 
Yangtze and engage the Japanese in the Yellow River area, but the 
orders had been ignored because the Communists wished to expand 
their holdings in the south. For reasons of discipline it was therefore 
necessary to disarm them. It was the Communist contention that the 
Government purpose was to restrict Communist areas and at the same 
time place the New Fourth Army in a hopeless military position. 


In spite of the frequent military friction between the Communist 
and Nationalist forces, the Government policy remained that of seek- 
ing a political settlement with the Communists. On March 6, 1941, 
in a reference to the “New Fourth Army Incident” in a speech to the 
People’s Political Council, the chief arena in which attempts were 
made to settle the issue between the Communists and Kuomintang, the 
Generalissimo said: 



. . the Government is solely concerned with leading the nation 
against the Japanese invaders and extirpating the traitors, and is 
utterly without any notion of again taking up arms to ‘suppress the 
Communists.’ . . . Provided unity can be preserved and resistance 
carried on to the end, the Government will be ready to follow your 
direction [i. e., the directions of the PPC] in the settlement of all 
outstanding questions.” 20 

No settlement was reached between the Kuomintang and the Chinese 
Communist Party, however, and the relations between the two armies 
continued strained, with periodic fighting, while at the meetings of 
the People’s Political Council a group of minor parties continued at- 
tempts at mediation. These minor parties had formed the “United 
National Construction League” 21 at the end of 1939, with the principal 
object of preserving Kuomintang-Communist cooperation. Minor 
parties played an important, if unsuccessful, role in the negotiations 
between the Communists and the Kuomintang prior to the offer of 
American good offices in 1944 by Major General Patrick J. Hurley, 
the Personal Representative of President Roosevelt. 

Attempts to settle the Kuomintang-Communist differences were not 
limited to discussions and statements before the PPC. On a number 
of occasions direct negotiations between Communist and Nationalist 
officials took place. The first of these occasions was the talks between 
General Ho Ying-ch’in, Minister of War in the National Government, 
and Chin Pang-hsien (Po Ku), a member of the Chinese Communist 
Party’s Central Committee, early in 1940. 

In September 1943 the Generalissimo gave explicit instructions to 
the Eleventh Plenary Session of the Fifth Central Executive Commit- 
tee of the Kuomintang that the Chinese Communist problem should be 
handled by peaceful means : 

“After hearing the Secretariat’s report on the question of the Chi- 
nese Communist Party and the views expressed by various members 
of the Central Executive Committee, I am of the opinion that first of 
all we should clearly recognize that the Communist problem is a purely 
political problem and should be solved by political means. Such 
ought to be the guiding principle for the Plenary Session in its effort 
to settle this matter.” 22 

Following the Eleventh Plenary Session, Communist General Lin 
Piao conducted negotiations in Chungking during November 1943 on 
the reorganization of the Communist forces. 

20 This speech is given in full in annex 38. 

21 This League went through several reorganizations and finally became known 
as the Democratic League. 

22 The full text is given in annex 39. 


More comprehensive discussions between representatives of the 
Chinese Government and the Chinese Communist Party began in Sian 
on May 4, 1944. The Government was represented at these talks by 
General Chang Chih-chung of the National Military Council and Dr. 
Wang Shih-chieh, then Minister of Information. The Communists 
were represented by Lin Tzu-han, an important member of the Central 
Committee of the Chinese Communist Party. Chang, Wang and Lin 
returned to Chungking on May 14, 1944, and continued the negotia- 
tions through an exchange of memoranda until September, when the 
negotiations were discussed in detailed reports to the PPC by Chang 
Chih-chung and Lin Tzu-han. 

During these discussions the following major points were brought 

1. The disposition, size, command, and training of the Communist 

2. The relationship between Communist-organized regional govern- 
ments and the National Government. 

3. Problems connected with civil rights and especially the legaliza- 
tion of the Communist Party and its activities in Nationalist areas. 

Incidental to these points a number of problems arose which were 
connected with the implementation of various pledges made by the 
Communist Party and the Kuomintang throughout the period of 
Kuomintang-Communist entente. During these discussions the ques- 
tion of constitutional government arose, and suggestions for “coalition 
government” were brought forth for the first time. 

Although no settlement was reached on the basis of these discussions, 
it is clear that from May to September 1944 the Chinese Government 
and the Chinese Communist Party were seeking a peaceful settlement 
of their disputes through political negotiations. 23 


During the spring of 1944, President Roosevelt appointed Vice 
President Henry A. Wallace to make a trip to China to see what he 
could do toward consolidating the Chinese war effort against J apan. 
Mr. Wallace took this opportunity to visit Soviet Central Asia for a 
brief inspection of agricultural developments, and arrived in Chung- 
king the latter part of June. In the course of this visit Mr. Wallace 
had several long conversations with the Generalissimo on matters of 
mutual interest. The notes made on these conversations indicate that 

23 See annexes 40, 41, and 42. 



a wide range of topics was discussed of which the majority have no 
bearing on the events and issues described in this present paper. 24 

In a conversation on June 21 with the Generalissimo, Mr. Wallace 
stated that the President had indicated to him that if the Kuomintang 
and the Communists could not get together they might “call in a 
friend”. The President had indicated that he might be that friend. 
John Carter Vincent, in a conversation the next morning, said that 
Stalin had agreed with Ambassador Harriman in Moscow that support 
of the Generalissimo was desirable during the prosecution of the war 
and expressed keen interest in a settlement between the Kuomintang 
and the Communists, basing his interest on the practical matter of more 
effective fighting against Japan rather than upon any ideological 
considerations, and adding that he felt the United States should assume 
a position of leadership in the Far East. 

During a conversation on the afternoon of June 22, the General- 
issimo launched into a lengthy complaint against the Communists, 
whose actions, he said, had had an unfavorable effect on Chinese 
morale. He added that the Chinese people regarded them more as 
internationalists than as Chinese, despite the nominal dissolution of 
the Third International. He then added that the Communists desired 
the breakdown of Chinese resistance against J apan because this would 
strengthen their own position. They did not fear such a development 
because they were now convinced that Japan would be defeated 
without Chinese resistance. The Generalissimo deplored propaganda 
to the effect that they were nothing more than agrarian democrats 
and remarked that they were more communistic than the Russians. 
He said that a settlement with the Communists would be simple if 
they would agree to support the Government and accept a peaceful 
and political role in the administration of the country. He urged 
that the United States maintain an attitude of “aloofness” toward 
the Communists which would encourage them to show a greater 
willingness to reach a settlement with Kuomintang. The Foreign 
Minister, who was present at the conversation, interposed at this stage 
to say that whereas the Government required the Communists to sub- 
mit to its authority, it was not its intention to interfere in local ad- 
ministration or remove officials or army officers who showed themselves 
to be cooperative. In conclusion, the Generalissimo said that he 
understood the policy of President Roosevelt and requested that the 

24 See annexes 43 and 44, for summary notes of these conversations made by 
John Carter Vincent, then Chief of the Division of Chinese Affairs of the Depart- 
ment of State, who accompanied the Vice President to China. The Department 
is not aware of any written record which Mr. Wallace himself may have made. 


President be informed that he, the Generalissimo, desired a political 
solution of the Communist problem. 

It was in a conversation on the following morning, June 23, that 
the Generalissimo suddenly reversed his previous refusal to permit 
Americans in Communist territory and agreed that an American 
military observer mission could proceed. 25 Later in the conversation 
the question of Russia again rose. Mr. Wallace stressed the point that 
no situation should be permitted in China which might lead to conflict 
with Russia. The Generalissimo agreed and added that anything 
not detrimental to Chinese sovereignty would be done to avoid such 
a conflict. Mr. Wallace again said that the United States could not 
be expected to be a party to any negotiations. The Generalissimo ex- 
pressed his concurrence and said that China would seek an early 
opportunity for discussions with Russia. In another conversation 
later in the day, the Generalissimo asked that the following message 
be conveyed to the President : “If the United States can bring about 
better relations between the U. S. S. R. and China, and can bring about 
a meeting between Chinese and Soviet representatives, President 
Chiang would very much welcome such friendly assistance.” 26 

During the ride to the airport on June 24, the Generalissimo twice 
expressed his appreciation that Mr. Wallace, as a representative of 
President Roosevelt, should lend his efforts for the improvement of 
Sino-Soviet relations. The Generalissimo also said he would wel- 
come the assistance of the President in the settlement of the Com- 
munist problem, even though it was an internal one. He also 
expressed his conviction that the Communists were not men of good 
faith, but that if the President were willing to take the risk of helping 
he would be happy to have such assistance and would not consider it 
as meddling in internal affairs. 


In September 1944 the negotiations went into a new phase with the 
arrival of General Hurley as the Personal Representative of the Presi- 
dent of the United States with the mission of promoting harmonious 
relations between Generalissimo Chiang and General Stilwell, and of 
performing certain other duties in connection with military supplies. 
It was only a few months later after the termination of the original 

25 Unsuccessful attempts had been made previously by the United States Army to 
secure Chinese permission for an observer group to go to Communist territory. 
On June 22 Mr. Wallace mentioned the subject and received an evasive answer 
from the Generalissimo. 

26 These views should be considered in connection with chapter IV. 



mission that the Kuomintang-Communist struggle, with the entrance 
of the United States on the scene, due to the need for prosecuting the 
war against Japan, took on an international aspect, which it had not 
possessed since the expulsion of the Russian Mission in 1927. The 
intervening seventeen years of bitter civil war and subsequent reluctant 
cooperation, under external threat, had created deep-seated hatreds, 
suspicions, differences of approach and objective, and a reluctance to 
forget the past which, more severely than was perhaps realized at the 
time, limited what could usefully be contributed by outside assistance. 


The Ambassadorship of Major General 
Patrick J. Hurley, 1944—1945 




Major General Patrick J. Hurley was appointed Personal Repre- 
sentative of the President to China on August 18, 1944. He arrived 
in Chungking on September 6, 1944. Mr. Clarence E. Gauss resigned 
as Ambassador to China on November 1, 1944, and General Hurley was 
nominated for the position on November 30, 1944. He presented his 
credentials on J anuary 8, 1945. 

To understand the reasons for the mission of General Hurley to 
China it is necessary to take into account the conditions which existed 
internally in China in 1943 and 1944. As indicated above, the Chinese 
record of opposition to Japanese aggression had been a distinguished 
and enviable one which commanded the admiration and sympathy of 
all peoples throughout the world who were opposing aggression. By 
1943, however, the devitalizing effects of six years of war were begin- 
ning to make themselves felt. This trend in 1944 became pronounced 
to an alarming degree. 

The long years of war were taking a heavy economic toll. Many 
of the most productive areas of China had been occupied by Japan. 
Inflation began to set in and the new Chinese middle class which had 
been the backbone of Kuomintang liberalism found itself being pro- 
gressively beggarized. In this situation the extreme right wing and 
reactionary elements in the Kuomintang came to exercise increasing 
power and authority. The regular and periodic political reports of 
the Embassy in Chungking indicated a steady deterioration in the 
economic situation and a growing paralysis within the governmental 
administrative hierarchy. It was symptomatic that the Embassy 
reported that the Twelfth Plenary Session of the Fifth Kuomintang 




Central Executive Committee had met in May 1944 but apparently 
accomplished little and had resulted in a serious setback for liberal 
elements in the Party. The Embassy also reported that liberal 
elements in the Party were discouraged by the trend but hoped that 
developments would support their contention that Kuomintang leader- 
ship was bankrupt. 

The protracted background of developments outlined in chapter 
II contributed to the particular state of relations between the 
Chinese Communists and the National Government which existed 
when General Hurley embarked on his mission. As has already been 
pointed out, following the Sian incident in late 1936 the Chinese Na- 
tional Government and the Chinese Communist Party had indicated 
their intention to present a united front against the Japanese invaders 
and to settle their differences by political means. Negotiations be- 
tween the Communists and the National Government had been pro- 
ceeding over a period of seven years prior to General Hurley’s mission 
to China. In his instructions to the Eleventh Plenary Session of the 
Fifth Central Executive Committee of the Kuomintang held in Sep- 
tember 1943, the Generalissimo had stated that he was of the opinion 
that “first of all we should clearly recognize that the Chinese Com- 
munist problem is a purely political problem and should be solved by 
political means”, 1 that is, through negotiations rather than through 
force. Accordingly, in the spring of 1944, active negotiations had been 
conducted at Sian by the National Government represented by Dr. 
Wang Shih-chieh and the Chinese Communist Party represented by 
Lin Tsu-han. 

Despite the announced intention of the Chinese Government and 
the Chinese Communist Party to seek a political, that is a negotiated, 
solution of their differences, and notwithstanding the fact that negotia- 
tions were being actively conducted to that end, the Chinese military 
effort against Japan was increasingly handicapped by internal dis- 

In a conversation on July 3 with an officer of the Embassy, Dr. 
Sun Fo, President of the Legislative Yuan, said he had discussed the 
situation frankly with the Generalissimo. He had told him that the 
Chinese armies must be rehabilitated if they were to be effective. He 
also pointed out that one of the principal obstacles to effective prose- 
cution of the war was the immobilization of some 300,000 of the 
Government’s best troops to watch the Chinese Communists. This 
factor, he said, also immobilized large Chinese Communist forces 
which had fought well against Japan and could do so again. Dr. Sun 
said he had told the Generalissimo that the Chinese Communists did 

1 China Handbook, 1987-1945 , P. 67. 


not want to communize or dominate China, that it would in any case 
be impossible for them to do so and that what they wanted was a 
settlement which would enable them to cooperate with the Nationalist 
Government against Japan. Dr. Sun added to the Embassy officer 
that the Generalissimo was used to making decisions himself and not 
taking advice. Dr. Sun felt, however, that his remarks had had some 
effect and that the Generalissimo was actually seeking in his own 
mind for means of reorienting some of his ideas. Dr. Sun felt that 
American opinion could be of assistance in this process if it did not 
appear to be bringing pressure on the Generalissimo. 

However discouraged other elements may have been by the internal 
deterioration and stalemate in the Chinese war effort against Japan, 
no such note appeared in the words or actions of the General- 
issimo. In his Double Tenth speech of October 10, 1944, he reiterated 
his determination to fight to the end and to preserve his leadership in 
the struggle for the consolidation of China. He also showed himself 
sensitive to foreign criticisms of internal developments and in a rather 
ominous note implied that foreign powers would be well advised not to 
interfere in the internal affairs of China, particularly in the relations 
of the National Government with the Chinese Communists. 

The foregoing considerations were repeatedly reflected in the reports 
made in 1944 by the American Ambassador, Mr. Gauss. As he often 
emphasized, these factors were having a disastrous effect upon the 
Chinese effort in the war against Japan. His comments and obser- 
vations were substantiated by periodic reports he received from Ameri- 
can consular officials in such widely diversified areas as Fukien, 
Kweilin, Kunming, Chengtu, Sian and Lanchow. 

Other American observers in China were becoming increasingly 
apprehensive over the fact that neither the Chinese Government nor 
the Chinese Communists were directing their main efforts against 
Japan. Congressman Mansfield in January of 1945 in his report to 
Congress following his return from his mission to China summarized 
this opinion: “On the basis of information which I have been able 
to gather, it appears to me that both the Communists and the 
Kuomintang are more interested in preserving their respective Parties 
at this time and have been for the past two years than they are in 
carrying on the war against Japan. Each Party is more interested 
in it own status because both feel that America will guarantee victory.” 


Ambassador Gauss had emphasized this point of view in a conver- 
sation with the Generalissimo on August 30, 1944. 2 He reported that 

* See annex 45. 



the Generalissimo had sent for him and had discussed the Chinese 
Communist problem for an hour and a half, saying that Washington 
did not understand the problem and it was the duty of the Ambassador 
to see that it did. In addition to making charges of bad faith and 
treachery against the Chinese Communists, General Chiang stated that 
the attitude of the American Government in urging China to resolve its 
differences with the Chinese Communists served only to strengthen the 
latter in their recalcitrance. He said that the Communist demands 
were equivalent to asking the Government to surrender unconditionally 
to a party known to be under the influence of a foreign power. He 
added that the United States should tell the Communists to settle their 
differences with and submit to the N ational Government. Ambassador 
Gauss stated that, being assured that he might speak frankly and 
openly, he was able to emphasize that the American Government was 
not interested in the cause of the Chinese Communists but that it was 
interested in seeing a solution of a Chinese internal problem which 
found Chinese armed forces facing each other rather than facing and 
fighting the Japanese and that this was of outstanding importance 
in that critical period of the war- He expressed his complete sym- 
pathy with the difficult task facing the Generalissimo in the solution 
of the Chinese Communist problem and added : 

“We have not suggested that the Chinese Government should capit- 
ulate to Communist demands. Our interest is solely in the unification 
of China and the dissipation of the present critical situation. Our 
hope is that a peaceful solution can be found to this problem by the 
Chinese themselves.” 

The Ambassador reported that he made the personal observation 
that while the Generalissimo said that the Chinese Communists were 
not to be trusted, the Embassy had long heard the Chinese Com- 
munists complain equally that the Kuomintang Government could not 
be trusted. It seemed to him that an effort should be made to dissi- 
pate this mutual mistrust and that it was his personal opinion that a 
solution might be found in some measure which would bring the most 
competent representatives of the several groups and parties to partici- 
pate in and share the responsibilities of the Government. He was of 
course aware of the Kuomintang contention that there could at that 
time be one-party government only. He indicated, however, that he 
would like to see the difficulty overcome. Even if it could not be over- 
come on a broad basis to give representation in the Government to 
minor parties, perhaps a limited solution might be found under which 
able representatives of the parties or special groups might be provided 
for, with these persons being invited to share in some form of responsi- 
ble war council which planned and carried out plans to meet the serious 


war crisis taking place in China. In conclusion the Ambassador said 
that in such sharing of responsibility perhaps there could be developed 
a disposition toward cooperation for unification of China. The Gen- 
eralissimo commented that this suggestion might at least be worth 

In response to the Ambassador’s report of this conversation, Secre- 
tary of State Hull informed Mr. Gauss that the President and he had 
given careful consideration to the report and agreed that a “positive, 
frank, and free approach to Chiang on the subject of governmental 
and related military conditions in China should be made at this time.” 
The Secretary indicated that the Generalissimo’s suggestion that the 
Chinese Communists should be told to settle their differences with the 
Government was similar to his previous suggestion to Vice President 
Wallace and that the general argument of the Generalissimo as set 
forth to the Ambassador showed a discouraging lack of progress in the 
thinking of the Generalissimo in view of his own professed desire to 
reach a settlement with the Chinese Communists and in view of dis- 
sident developments in other areas not under Chinese Communist 
influence. The Secretary then suggested that the Ambassador might 
tell the Generalissimo that if the latter would arrange a meeting the 
Ambassador would be prepared to speak to the Communist represent- 
ative in Chungking along the same general lines as the Ambassador 
and the Vice President had spoken to him ; that the Ambassador would 
point out to the Communist representative that unity in China in 
prosecuting the war and in preparing for the peace was urgently neces- 
sary ; that a spirit of tolerance and good will — of give and take — was 
essential in achieving such unity; that Chinese of every shade of 
political thinking should cooperate now to defeat the J apanese ; and 
that differences could be settled if the major objective of victory was 
kept firmly in mind. The Ambassador was requested to inform 
Chiang (1) that the President and the Secretary felt that Mr. Gauss’ 
suggestion for a coalition council was deserving of careful considera- 
tion; (2) that they were concerned, not only regarding non -settlement 
with the Chinese Communists, but also with regard to reports of dis- 
content and dissidence in other parts of the country among non- 
Communist Chinese; (3) that they were not interested in the Com- 
munists or other dissident elements as such, but were anxious that the 
Chinese people develop and utilize, under the leadership of a strong 
representative and tolerant government, the physical and spiritual 
resources at their command in carrying on the war and establishing 
a durable democratic peace. 3 

* See annex 46. 




Although Ambassador Gauss transmitted this message to Chiang 
Kai-shek, he doubted that the Generalissimo would take the necessary 
steps or was even capable of doing so. He was also pessimistic over 
the prospects for negotiation with the Communists in view of the deep 
suspicion on both sides and inability to recognize realities. He even 
questioned the Chinese desire to cooperate actively in the war against 
Japan. The reports from the Embassy during October and early 
November present a depressing picture of a deteriorating situation, 
characterized by internal squabbles and apathy. 

The discouraging conclusions of Ambassador Gauss were further 
reinforced from a source other than the Embassy or the Consulates. 
Several Foreign Service officers, all specialists in the Far East, at 
the request of the United States Army, were attached to the staff of 
the Commanding General of the China-Burma-India (later China) 
Theater for liaison duties. These officers had a unique opportunity, 
through travel and contacts with American and Chinese Military 
authorities, to observe conditions and report their reactions. These 
reports were made available to American officials concerned. The 
memoranda of these officers were prepared on a wide range of subjects 
and during a period of over two years, from early 1943 to early 1945, 
when the end of the war with J apan was not yet recognized as immi- 
nent. They show the development of the following themes : 

1. Russian intentions with respect to the Far East, including China, 
are aggressive. 

2. The Chinese Communists have a background of subservience to 
the U. S. S. R., but new influences — principally nationalism — have 
come into play which are modifying their outlook. 

3. The Chinese Communists have become the most dynamic force 
in China and are challenging the Kuomintang for control of the 

4. The Kuomintang and National Government are disintegrating. 

5. The rivalry between these two forces threatens to culminate in a 
civil war which (a) would hamper the conduct of the war against 
Japan, (b) would press the Communists back into the arms of the 
U. S. S. R. and (c) might well lead eventually to American Soviet 
involvement and conflict. 

6. The Communists would inevitably win such a war because the 
foreign Powers, including the United States, which would support the 
Government, could not feasibly supply enough aid to compensate for 
the organic weaknesses of the Government. 

7. In this unhappy dilemma, the United States should attempt to 
prevent the disaster of a civil war through adjustment of the new align- 


ment of power in China by peaceful processes. The desirable means to 
this end is to encourage the reform and revitalization of the Kuo- 
mintang so that it may survive as a significant force in a coalition 
government. If this fails, we must limit our involvement with the Kuo- 
mintang and must commence some cooperation with the Communists, 
the force destined to control China, in an effort to influence them 
further into an independent position friendly to the United States. 
We are working against time because, if the U. S. S. R. enters the war 
against Japan and invades China before either of these alternatives 
succeeds, the Communists will be captured by the U. S. S. R. and be- 
come Soviet satellites. 

8. A policy of this description would also — and this is a decisive con- 
sideration in the war against Japan — measurably aid our war effort. 4 


As serious as were the other factors which contributed to the general 
deterioration during 1944 the most crucial point certainly, and the 
one which loomed largest in official American thinking, was the disin- 
tegration of the military situation which threatened the collapse of 
the entire Chinese war effort. It was this military factor which most 
immediately concerned American officials. Signs of military disinte- 
gration appeared in the spring, assumed major proportions during 
the summer, and eventuated in disaster during the fall. On April 17 
the Japanese launched an attack southward across the Yellow River 
which marked the beginning of their campaign to open the Peiping- 
Hankow Railroad. On May 18 Loyang in the Yellow River area was 
captured and the remnants of Tang En-po’s troops were set upon by 
the local populace. With the capture of Kaifeng the entire Honan 
front collapsed. 

On May 27 the Japanese opened the drive southward into Hunan 
Province across the Yangtze and along the Hankow-Canton Railroad. 
On June 6, Huan-Chiang was occupied and the important center of 
Changsha was flanked to the west. On June 18 Changsha was cap- 
tured and ten days later Hengyang was surrounded, though it did not 
fall until August 8. This placed the Japanese forces in a position 
to mount an offensive against the strategic air base Kweilin. In mid- 
August the J apanese mounted a new offensive in the coastal province 
of Chekiang. This drive resulted in the capture of Lishui on August 
28. In mid-September Japanese forces crossed from Hunan into 
Kwangsi Province. 

During the ensuing weeks J apanese forces from the north and south- 
east converged on Kweilin, which fell on November 12. With this 

4 See annex 47. 



development the entire East China front had collapsed and there was 
little reason to believe that the Japanese if they so elected would not 
have the capability of attacking Chungking and the vitally important 
American base at Kunming. The situation was further complicated 
by reverses on the Salween front in Burma. Increasingly it had be- 
come apparent that the Chinese war effort had largely ceased to be an 
effective factor in China and that to a disturbing extent the Chinese 
will to fight had vanished. The main Nationalist effort was being con- 
centrated on containment of Communists in the north and in internal 
political squabbles in Chungking. It was only in Burma, where the 
Chinese troops were under the direct command of General Stilwell, 
that Chinese ground forces were making a distinct military contri- 

president roosevelt’s messages to generalissimo 


It was particularly this rapidly disintegrating military situation 
in East China which gave the most serious concern to President Roose- 
velt. As he saw it the first step in the solution would be the appoint- 
ment of an American general to the command of all Chinese armies. 
On July 7, 1944, the President sent the following message to the 

“The critical situation which now exists in my opinion calls for 
the delegation to one individual of the powers to coordinate all the 
Allied military resources in China, including the Communist forces. 
... I am promoting Stilwell to the rank of full General and I 
recommend for your most urgent consideration that you recall him 
from Burma and place him directly under you in the command of all 
Chinese and American forces, and that you charge him with the full 
responsibility and authority for the coordination and direction of the 
operations required to stem the tide of the enemy’s forces. I feel that 
the case of China is so desperate that if radical and promptly applied 
remedies are not immediately effected, our common cause will suffer 
a disastrous setback.” 

The Generalissimo agreed to this proposal in principle but sug- 
gested that as a preliminary step a high ranking American official 
well acquainted with political as well as military matters and having 
the complete confidence of the President be sent to Chungking to 
discuss the problem. On J uly 15 the President replied as follows : 

“I am very glad to learn that in principle you are in agreement 
with the proposal to place General Stilwell in absolute command 
under you of the Chinese troops without any hindrance. . . I am 
searching for a personal representative with far sightedness and po- 


litical ability to collaborate with you. . . In the meantime I again 

urge you to take all steps to pave the way for General Stilwell’s as- 
sumption of command at the earliest possible moment.” 

The President followed up this message with another one of 
August 10 : 

“I have this proposal to make: That General Patrick J. 
Hurley ... be designated by me as my personal representative 
with you. . . He should be of great service in adjusting relations 

between you and General Stilwell. . . .” 

The President also proposed that Mr. Donald Nelson accompany 
General Hurley to deal with lend-lease and other economic matters. 
The Generalissimo accepted the proposal. 

On August 23 the President again urged on the Generalissimo the 
appointment of General Stilwell to the command of all Chinese Armies 
in the following message : 

“I am glad that you find General Hurley and Mr. Nelson acceptable 
for the important mission they will perform for us. Now that my 
personal representatives to you have been decided upon, I think we 
should proceed immediately to take the positive steps demanded by 
the military situation. I urge that you take the necessary measures 
to place General Stilwell in command of the Chinese forces, under 
your direction, at the earliest possible date. ... I feel certain, how- 
ever, that between General Hurley and General Stilwell there will be 
an adequate comprehension of the political problems you face. I am 
urging action in the matter of Stilwell’s appointment so strongly 
because I feel that, with further delay, it may be too late to avert a 
military catastrophe tragic both to China and to our allied plans for 
the early overthrow of J apan. ... I do not think the forces to come 
under General Stilwell’s command should be limited except by their 
availability to defend China and fight the Japanese. When the enemy 
is pressing us toward possible disaster, it appears unsound to reject 
the aid of anyone who will kill J apanese. ... I feel sure that Gen- 
eral Hurley will be highly useful in promoting relations which will 
facilitate General Stilwell’s exercise of command and his understand- 
ing of the related political problems. . . .” 

Despite his earlier agreement in principle, the Generalissimo had 
still failed to place General Stilwell in command and the relations be- 
tween the two men became increasingly bad. By early September, the 
military picture had become so ominous that the President felt com- 
pelled to send still another message to the Generalissimo : 

“After reading the last reports on the situation in China my Chiefs 
of Staff and I are convinced that you are faced in the near future with 
the disaster I have feared. ... I have urged time and again in 



recent months that you take drastic action to resist the disaster which 
has been moving closer to China and to you. Now, when you have 
not yet placed General Stilwell in command of all forces in China, we 
are faced with a loss of a critical area in East China with possible 
catastrophic consequences.” 


On September 22, General Stilwell reported to the Chief of Staff in 
Washington his estimate of the Generalissimo’s actions : 

“Chiang Kai-shek is following his usual policy. At first he readily 
agreed to the command arrangement and also by inference agreed to 
use the communist army under my command, then he began the delay- 
ing action, which still continues. He protests that there are many 
difficulties which have to be smoothed out and this takes time. Actu- 
ally, he believes that our advance in the Pacific will be swift enough 
and effective enough to spare his further effort, and he would like to 
avoid the bitter pill of recognizing the communists and putting a 
foreigner in command of the army. . . .” 

On September 26, General Stilwell again reported to the Chief of 

Staff as follows : 

“Chiang Kai-shek has no intention of making further efforts to 
prosecute the war. Anyone who crowds him toward such action will 
be blocked or eliminated . . . Chiang Kai-shek believes he can 
go on milking the United States for money and munitions by using 
the old gag about quitting if he is not supported. He believes the war 
in the Pacific is nearly over, and that by delaying tactics, he can throw 
the entire burden on us. He has no intention of instituting any real 
democratic regime or of forming a united front with the communists. 
He himself is the main obstacle to the unification of China and her 
cooperation in a real effort against Japan ... I am now convinced 
that, for the reasons stated, the United States will not get any 
real cooperation from China while Chiang Kai-shek is in power. I 
believe he will only continue his policy and delay, while grabbing for 
loans and postwar aid, for the purpose of maintaining his present 
position, based on one-party government, a reactionary policy, or the 
suppression of democratic ideas with the active aid of his gestapo.” 

Shortly before his departure from China, General Stilwell gave 
yet another estimate of the crisis involving himself to the Chief of 

Staff : „ . 

“It is not a choice between throwing me out or losing Chiang Kai- 

shek and possibly China. It is a case of losing China’s potential effort 
if Chiang Kai-shek is allowed to make removals now. I believe that 
the solution to the problem lies in insisting on the acceptance of our 


proposals yet at the same time giving the Generalissimo a boost in 
prestige which will permit him to give his agreement without loss of 
face or offense to the Chinese Nationalist spirit.” 

By this time it had become apparent to General Hurley that the 
relations between the Generalissimo and General Stilwell had reached 
a point where no kind of a third party intervention could possibly 
remedy the damage already done except by the removal of General 
Stilwell, and furthermore, that no progress could be made in other 
outstanding questions until a new American Supreme Commander 
had been appointed. President Roosevelt accepted this point of view 
and Major General Albert C. Wedemeyer was designated to replace 
General Stilwell. There was seemingly no real effort made subse- 
quently to have General Wedemeyer named to command all Chinese 
armies. It should be remembered in this connection that by the end of 
the year it was apparent that the Japanese did not intend to push be- 
yond Kweilin for the capture of Chungking, and furthermore that the 
serious military situation which had developed in Burma early in the 
summer had been considerably alleviated. 

In his final report to the War Department, General Stilwell 
made the following comments in appraisal of the controversy 
in which he had been a principal figure : 

“However, as the level of command rose, national policies and politics 
entered the picture with resulting deterioration in sincerity and in 
cooperation. With the one exception of the Chinese Army in India 
where General Stilwell had been given direct command of the forces, 
the Americans enjoyed no command functions in the Chinese Army. 
Elsewhere the Theater Commander lacked the right of ‘order’. Con- 
sequently, having no overall control, he could neither form the 
strategy nor direct the tactics. Holding in general to a purely advisory 
role, the Americans were often regarded with a jaundiced look of 
suspicion. In some instances our honest efforts, and our impartial 
action demonstrated an altruistic motive which won the respect and 
trust of certain field commanders. This favorable reaction to our 
conduct did not always hold true in the Chungking Government. In 
high places we were generally regarded as interlopers' of cunning de- 
meanor distributing largesse, most of which failed to materialize. 

“ ‘Aid to China 5 , once undertaken, should have been vigorously 
prosecuted. Fortified with a full knowledge of China’s governmental 
venality, her economic chaos, her military weakness, a written agree- 
ment to a plan committing her to a vigorous prosecution of the war 
under American supervision and material assistance should have been 
signed before we tendered any aid. 

“It became increasingly obvious that a more frank and vigorous 
foreign policy would have helped to gain China’s whole-hearted cooper- 



ation, and her acknowledgment that our cooperation depended upon 
determined action on her part. The genial, parental admonishments 
of our government had failed to persuade the head of China’s Central 
Government to recognize his political opponents — not even as a con- 
cession to the United States who regarded such recognition as* impor- 
tant to the war effort. Certain factors entered into the picture, illumi- 
nating the fallacy of political placation, vain promise, and shabby 
support of a vacillating policy which drained public funds into a futile 

“Japanese aggression imposed a temporary unity on the various 
elements in struggling to determine whether China would progress 
along democratic or authoritarian lines. Of these elements Chiang 
Kai-shek was the strongest, and public opinion compelled him to 
assume the symbol of national unified will. 

“Faced with the Japanese offensive designed to disintegrate China 
and bring about its collapse, Chiang chose to abandon national unity 
and to steer a course seeking to dominate rather than to unify and lead. 
He sought to dominate because he had no appreciation of what genuine 
democracy means. 

“The Kuomintang party, of which he is the leader, was once the 
expression of genuine nationalistic feeling, but is now an uncertain 
equilibrium of decadent, competing factions, with neither dynamic 
principles nor a popular base. Chiang controls by manipulating these 
functions with an adroit political sense. His seat is insecure. His 
reluctance to expand military strength, his preoccupation with the 
security of domestic supremacy, his suspicion of everyone around him, 
and his increasing emotional instability betrayed a realization of this. 
He became a hostage of the forces he manipulated. 

“Nowhere does Clausewitz’s dictum that war is only the continuation 
of politics by other methods apply with more force that it did in CBI. 
In handling such an uncertain situation as existed in that theater of 
war, the Americans would have done well to avoid committing them- 
selves unalterably to Chiang, and adopted a more realistic attitude 
toward China itself. We could gain little by supporting the attitude 
of the Chiang regime. We could have gained much by exerting pres- 
sure on Chiang to cooperate and achieve national unity, and if he 
proved unable to do this, then in supporting those elements in China 
which gave promise of such development.” 4a 

4a The present treatment of the controversy surrounding General Stilwell does 
not purport to be a full and complete account of that crisis. Only that material 
has been used which would serve as background for the Mission of General Hurley. 
It is the understanding of the Department of State that the National Military 
Establishment is preparing a full history of World War II and that this period 
will be more fully treated therein. 


It was primarily to prevent that which did finally happen that 
General Hurley was dispatched to China by President Roosevelt. 
Once that crisis had been resolved with the appointment of General 
Wedemeyer, General Hurley undertook to lend his good offices in other 


According to General Hurley’s report to the Department of State 
his instructions from the White House dated August 18 were (1) to 
serve as personal representative of the President to Generalissimo 
Chiang Kai-shek; (2) to promote harmonious relations between 
Chiang and General J oseph Stilwell and to facilitate the latter’s exer- 
cise of command over the Chinese armies placed under his direction ; 
(3) to perform certain additional duties respecting military supplies; 
and (4) to maintain intimate contact with Ambassador Gauss. A few 
months later, after his appointment as Ambassador, General Hurley 
outlined his understanding of his mission and of United States 
policy in China in the following terms: “(1) To prevent the col- 
lapse of the National Government, (2) to sustain Chiang Kai-shek 
as President of the Republic and Generalissimo of the Armies, (3) to 
harmonize relations between the Generalissimo and the American Com- 
mander, (4) to promote production of war supplies in China and pre- 
vent economic collapse, and (5) to unify all the military forces in 
China for the purpose of defeating Japan.” 


In company with Mr. Donald Nelson, chairman of the War Pro- 
duction Board, and a Special Representative of President Roosevelt, 
General Hurley had flown to Chungking by way of Moscow, where they 
had discussed the Chinese situation with Foreign Minister Molotov. 
According to Mr. Nelson’s report of this conversation, he explained 
that his main business in China concerned economic matters and that 
General Hurley’s concerned military matters ; that Chinese coopera- 
tion in the war was of “vital importance”; and that to achieve this the 
United States Government must support Generalissimo Chiang and 
effect complete unity in China. In response to Mr. Nelson’s request for 
Soviet opinion on this subject, Mr. Molotov replied that it was difficult 
to judge the Chinese situation from Washington or Moscow but that he 
would be willing to express some off-the-record thoughts. Mr. Molo- 
tov’s remarks were summarized in the report as follows : 

“Molotov then talked at length on the Generalissimo’s imprison- 
ment at Sian in 1936 and said that relations between China and the 



Soviet Union were tense at that time. However, he said that the 
Soviet Government had turned its back on the Chinese revolutionary 
groups led by Chang Hsueh-liang and Wang Ching-wei which in- 
cluded many Communists and which looked to the Soviet Union for 
sympathy and aid and had issued a statement to the effect that J apanese 
provocation had been the cause of the uprising in Sian and other events 
in China. Due to the political and moral support of the Soviet govern- 
ment, Chiang had been allowed to return to the seat of his government 
and the revolutionary leader (Chang Hsueh-liang) had been arrested. 
The Soviets had hoped as a result of their action that Soviet-Chinese 
relations would change for the better. However, the Chinese had 
shown little interest in strengthening relations which had on the con- 
trary deteriorated in recent years. 

“ Although he said that the Soviet government had unjustifiably been 
held responsible for various happenings in China during recent years, 
Molotov stressed that it would bear no responsibility for internal 
affairs or developments in China. Molotov then spoke of the very 
impoverished conditions of the people in parts of China, some of 
whom called themselves Communists but were related to Communism 
in no way at all. It was merely a way of expressing dissatisfaction 
with their economic condition and they would forget this political 
inclination when their economic condition improved. The Soviet gov- 
ernment should not be associated with these ‘communist elements’ nor 
could it in any way be blamed for this situation. The solution of the 
entire situation was to make the Chinese government work in the com- 
mon interest and cope with the tasks before it and to make life more 
normal in China. Molotov said in conclusion that the Soviets would be 
glad if the United States aided the Chinese in unifying their country, 
in improving their military and economic condition and in choosing for 
this task their best people. . . . Molotov’s satisfaction at being con- 
sulted was clearly indicated. He gave little new information but he 
confirmed statements made previously that his government would be 
glad to see the United States taking the lead economically, politically, 
and militarily in Chinese affairs. Molotov made it clear also that 
until Chiang Kai-shek tried by changes in his policies to improve Sino- 
Soviet relations, the Soviet government did not intend to take any 
interest in Chinese governmental affairs.” 

The importance of this conversation is apparent from the frequent 
references in General Hurley’s subsequent reports to Molotov’s expres- 
sion of Soviet policy toward China. 




Upon arriving at Chungking in September, General Hurley came to 
the conclusion that the success of his mission “to unify all the military 
forces in China for the purpose of defeating Japan 55 was dependent on 
the negotiations already under way for the unification of Chinese 
military forces. Accordingly, shortly after his arrival he undertook 
active measures of mediation between the Chinese National Govern- 
ment and the Chinese Communist Party. 

In December 1944 General Hurley commented as follows regarding 
his early efforts at reconciliation : 

“At the time I came here Chiang Kai-shek believed that the Com- 
munist Party in China was an instrument of the Soviet Government 
in Russia. He is now convinced that the Russian Government does 
not recognize the Chinese Communist Party as Communist at all and 
that (1) Russia is not supporting the Communist Party in China, 
(2) Russia does not want dissensions or civil war in China, and (3) 
Russia desires more harmonious relations with China. 

“These facts have gone far toward convincing Chiang Kai-shek 
that the Communist Party in China is not an agent of the Soviet 
Government. He now feels that he can reach a settlement with the 
Communist Party as a Chinese political party without foreign en- 
tanglements. When I first arrived, it was thought that civil war after 
the close of the present war or perhaps before that time was inevitable. 
Chiang Kai-shek is now convinced that by agreement with the Com- 
munist Party of China he can (1) unite the military forces of China 
against Japan, and (2) avoid civil strife in China. 55 

With respect to specific steps taken by him, General Hurley reported 
in December 1944 that with the consent, advice and direction of 
the Generalissimo and members of his Cabinet and on the invitation 
of leaders of the Communist Party, he had begun discussions with the 
Communist Party and Communist military leaders for the purpose 
of effecting an agreement to regroup, coordinate and unite the military 
forces of China for the defeat of Japan. He continued : “The defeat 
of Japan is, of course, the primary objective, but we should all under- 
stand that if an agreement is not reached between the two great 
military establishments of China, civil war will in all probability 
ensue. 55 




Following discussions with Chinese Government and Chinese Com- 
munist representatives in Chungking, General Hurley on November 7, 
1944, flew to Yenan for a two-day conference with Mao Tse-tung, the 
Chairman of the Central Executive Committee of the Chinese Com- 
munist Party. The Communist leaders were impressed by the fact 
that General Hurley had taken the initiative in making this 
flight and cordial relations were established at once. As a result of 
these discussions there was evolved at Yenan a five-point draft, entitled 
“Agreement Between the National Government of China, the Kuomin- 
tang of China and the Communist Party of China,” which was signed 
by Mao Tse-tung as Chairman of the Central Executive Committee 
of the Chinese Communist Party on November 10, 1944, and by Gen- 
eral Hurley as a witness. This important agreement read as follows : 

“(1) The Government of China, the Kuomintang of China and the 
Communist Party of China will work together for the unification of 
all military forces in China for the immediate defeat of Japan and 
the reconstruction of China. 

u (2) The present National Government is to be reorganized into a 
coalition National Government embracing representatives of all anti- 
Japanese parties and non-partisan political bodies. A new democratic 
policy providing for reform in military, political, economic and cul- 
tural affairs shall be promulgated and made effective. At the same 
time the National Military Council is to be reorganized into the United 
National Military Council consisting of representatives of all anti- 
Japanese armies. 

“(3) The coalition National Government will support the prin- 
ciples of Sun Yat-sen for the establishment in China of a government 
of the people, for the people and by the people. The coalition Na- 
tional Government will pursue policies designed to promote progress 
and democracy and to establish justice, freedom of conscience, freedom 
of press, freedom of speech, freedom of assembly and association, the 
right to petition the government for the redress of grievances, the right 
of writ of habeas corpus and the right of residence. The coalition 
National Government will also pursue policies intended to make 
effective the two rights defined as freedom from fear and freedom 
from want. 

“(4) All anti- Japanese forces will observe and carry out the orders 
of the coalition National Government and its United National Military 
Council and will be recognized by the Government and the Military 
Council. The supplies acquired from foreign powers will be 
equitably distributed. 


“(5) The coalition National Government of China recognizes the 
legality of the Kuomintang of China, the Chinese Communist Party 
and all anti- J apanese parties.” 


General Hurley felt that this Five-Point Draft Agreement, which 
he promptly submitted to the National Government, offered a prac- 
tical plan for settlement with the Communists. National Government 
leaders, however, said that the Communist plan was not acceptable. 
The National Government submitted as counter-proposal a Three- 
Point Agreement reading as follows : 

(1) The National Government, desirous of securing effective uni- 
fication and concentration of all military forces in China for the 
purpose of accomplishing the speedy defeat of Japan, and looking 
forward to the post-war reconstruction of China, agrees to incorporate, 
after reorganization, the Chinese Communist forces in the National 
Army who will then receive equal treatment as the other units in 
respect of pay, allowance, munitions and other supplies, and to give 
recognition to the Chinese Communist Party as a legal party. 

“(2) The Communist Party undertakes to give their full support 
to the National Government in the prosecution of the war of resistance, 
and m the post-war reconstruction, and give over control of all their 
troops to the National Government through the National Military 
Council. The National Government will designate some high rank- 
ing officers from among the Communist forces to membership in the 
National Military Council. 

“(3) The aim of the National Government to which the Communist 
Party subscribes is to carry out the Three People’s Principles of Dr. 
Sun Yat-sen for the establishment in China of a government of the 
people, for the people and by the people and it will pursue policies 
designed to promote the progress and development of democratic 
processes in government. 

“In accordance with the provisions of the Program of Armed Re- 
sistance and National Reconstruction, freedom of speech, freedom of 
the press, freedom of assembly and association and other civil liberties 
are hereby guaranteed, subject only to the specific needs of security 
m the effective prosecution of the war against Japan.” 


This proposal was handed to General Chou En-lai, the Communist 
representative in Chungking, on November 22 and was taken by him 
to Yenan early in December. Following his arrival in Yenan, Gen- 



eral Chou wrote General Hurley a letter, which the latter reported 
as follows : 

“The refusal of the Generalissimo and the National Government of 
our minimum five point proposal, clearly showing disagreement with 
our suggestions for a coalition government and united military coun- 
cil and the submission of the three point counter-proposal, preclude 
the possibility of my returning to Chungking for further negotiations. 
We find it impossible to see any fundamental common basis in these 
new proposals. We feel that publication of our five-point proposal is 
now called for in order to inform the public and to bring out the chang- 
ing attitude of the Government. 

“Despite the fact that President Chiang has so limited the question 
of military cooperation between us that no easy solution can be 
achieved, we completely desire to continue to discuss with you and 
General Wedemeyer 5 the concrete problems of our future military 
cooperation and to continue the closest contact with the United States 
Army Observers Section in Yenan. Chairman Mao Tse-tung has es- 
pecially asked me to express his deep thanks and appreciation for 
your sympathy and energetic efforts on behalf of unity in China.” 

General Hurley reported that he was conferring daily with the 
Generalissimo and members of his cabinet “endeavoring to liberalize 
the counter-proposal. We are having some success. The General- 
issimo states that he is anxious that the military forces of the Com- 
munist Party in China and those of the National Government be 
united to drive the invaders from China. The Communist leaders 
declare this is also their objective. I have persuaded Chiang that in 
order to unite the military forces in China and prevent civil conflict 
it will be necessary for him and the Kuomintang and the National 
Government to make liberal political concessions to the Communist 
Party and to give them adequate representation in the National Gov- 

General Hurley, who reported that all his communications with 
Yenan without exception were sent with the full knowledge and 
consent of the high officials of the National Government, wrote Chou 
En-lai that it was his understanding that the five-point offer of settle- 
ment proposed by the Chinese Communists was to form the basis 
of discussion and was not a “take it or leave it” proposition ; that the 
Communist Party was willing to consider suggestions for amendments 
by the National Government and that the three-point offer in response 
to the Communist proposal was not the final word of the National 

* General Wedemeyer had replaced General Stilwell in November as com- 
mander of United States forces in the China Theater. 


Government. He regarded both instruments as steps in the nego- 
tiations and it was his understanding that publication of the five-point 
Communist proposal would be withheld while negotiations were pend- 
ing. He did not believe that negotiations had been terminated unless 
General Chou so wished them, and he knew that the National Gov- 
ernment was disposed to make every effort to unify China. He felt 
it would be a great tragedy if the door were closed at this critical hour 
to further discussions. 

General Chou replied to General Hurley on December 16, 1944, 
stating that the unexpected and flat rejection by the Kuomintang of 
the Communist five-point proposal caused a deadlock in the negotia- 
tions and rendered his return to Chungking useless. He indicated 
that this could not be construed as Communist discontent with the 
United States and that he agreed with the advice of General Hurley 
against the publication of the five points, but insisted that they should 
be made public when the appropriate time came. The one funda- 
mental difficulty with respect to these negotiations, he felt, was the 
unwillingness of the Kuomintang to forsake one-party rule and accept 
the proposal for a “democratic coalition government.” 

General Hurley replied to General Chou En-lai in a telegram on 
December 21, 1944, stating his belief that chances for success along 
the general lines of the Communist proposals would be “brighter 
than ever before if he would come again to Chungking.” On Decem- 
ber 24, Mao Tse-tung telegraphed General Hurley stating that General 
Chou was occupied with “important conference preparations” which 
made his departure from Yenan difficult. Mao stated that the National 
Government had not shown sufficient sincerity to warrant continuing 
negotiations on the basis of the five-point proposal and he suggested 
a conference in Yenan. On December 28, General Chou wrote General 
Hurley that the Communists would not be willing to continue abstract 
discussions on the question of accepting their proposal for a “demo- 
cratic coalition government.” He proposed instead the following 
four additional points which he requested the Ambassador to com- 
municate to the Chinese Government authorities “to see whether they 
are determined to realize democracy and unity”: (1) The release of 
all political prisoners; (2) the withdrawal of Kuomintang forces sur- 
rounding the border region and those attacking the new Fourth Army 
and the South China Anti-Communist column; (3) the abolition of 
all oppressive regulations restricting the people’s freedom ; and (4) 
cessation of all secret service activity. 

Ambassador Hurley replied in a letter dated January 7, 1945, ad- 
dressed to Mao Tse-tung and Chou En-lai, stating that the additional 
four points outlined in the latter’s letter of December 28 constituted 



a departure from “our original agreed procedure which was to arrive 
at an agreement on general principles before discussing specific de- 
tails.” The Ambassador also stated that he was convinced that the 
National Government was sincerely desirous of making such conces- 
sions as would make a settlement possible, but that such matters could 
not be discussed by telegram or letter. He suggested, after obtaining 
the approval of the National Govermnent, that he make a brief visit 
to Yenan, accompanied by Dr. T. V. Soong, Dr. Wang Shih-chieh, and 
General Chang Chih-chung, to discuss matters in person and that Mao 
Tse-tung and Chou En-lai might return with the foregoing group to 
Chungking if agreement in principle were reached as a result of the 
discussions in Yenan. 


In a reply to this proposal, on January 11, Mao Tse-tung stated that 
the proposal for a conference between both parties at Yenan was 
greatly appreciated but that he felt that nothing could be achieved 
thereby. He proposed that a preparatory conference be called in 
Chungking for the purpose of convening a National Affairs Con- 
ference; that the preparatory conference include Kuomintang, Com- 
munist and Democratic League delegates; that the proceedings of 
the conference be made public; and that “the delegates have equal 
standing and freedom to travel.” He added that if the National Gov- 
ernment found these proposals acceptable General Chou would proceed 
to Chungking for discussions. On January 20, the Ambassador wrote 
Mao Tse-tung with the knowledge and approval of the Generalissimo 
outlining certain changes that were contemplated in the National 
Government. General Hurley added “it may well be that this measure 
together with the other measures that have been offered by the National 
Government may not be sufficient to satisfy the Chinese Communists, 
but I think it would be a great pity if such far-reaching government 
proposals were rejected out of hand without due consideration. As a 
friend of China I suggest you send General Chou En-lai or any other 
representative you may select to Chungking for a brief visit to talk 
matters over with the Government. It need not take long; if he is 
busy two or three days would be sufficient.” On January 23, the Am- 
bassador was informed by Mao Tse-tung in reply that General Chou 
was being sent to Chungking to negotiate with the Government. 


Following the arrival of General Chou in Chungking on January 
24 a series of conferences were held in which Dr. T. V. Soong, Acting 
President of the Executive Yuan and Minister for Foreign Affairs, 


Dr. Wang Shih-chieh, Minister of Information, and General Chang 
Chih-chung, Director of Political Training of the National Ministries 
Council, represented the National Government. General Chou rep- 
resented the Chinese Communist Party and General Hurley attended 
on the invitation of both parties. Dr. Wang Shih-chieh stated that 
the National Government was prepared to take the following measures, 
in addition to its previous three-point proposal : 

“1. The Government will set up, in the Executive Yuan, an organ 
whose nature resembles a war cabinet, with a membership of from 
seven to nine men, to act as the policy making body of the Executive 
Yuan. The Chinese Communist Party and other parties will be given 
representation on this organ. 

“2. The Generalissimo of the National Military Council will appoint 
two Chinese Army officers (of whom one will be an officer of the 
Chinese Communist troops) and one American Army officer to make 
recommendations regarding the reorganization, equipment and sup- 
plies of Chinese Communist troops, for approval by the Generalissimo 
of the National Military Council. 

“3. The Generalissimo of the National Military Council will appoint 
one American Army officer as the immediate commander of Chinese 
Communist troops for the duration of the war against Japan. The 
said immediate commander of Chinese Communist troops shall be 
responsible to the Generalissimo of the National Military Council. 
He shall insure the observance and enforcement of all government 
orders, military or nonmilitary, in the area under his control.” 


Ambassador Hurley stated that he had no authority from his Gov- 
ernment to agree that an American Army officer would participate as 
indicated in the National Government’s proposal. General Chou 
objected that Dr. Wang was not yet fully aware of the fundamental 
aims of the Communists. Despite the Generalissimo’s New Year’s 
speech, in which he had spoken of the necessity for adopting a consti- 
tution at an early date and returning the control of the Government 
to the people, it appeared to General Chou that Dr. Wang’s proposal 
represented merely concessions made by the Kuomintang while that 
party still retained control of the Government. General Chou re- 
peated the position which he and Mao Tse-tung had expressed to 
General Hurley when they had negotiated the original Five-Point 
Agreement, namely, that the Communist Party would not submit the 
command of its troops to the Kuomintang Party although it was pre- 
pared to turn over command of its troops to the National Government 
when the one-party rule of the Kuomintang had been abolished and 



the Government had been reconstituted as a coalition administration 
representing all parties. He would favor at such time establishing a 
military commission to reorganize the Chinese armed forces, but he 
would not agree that such a commission should be permitted to re- 
organize only Communist troops. The entire Chinese military estab- 
lishment should be reorganized and he would be glad to see an 
American serve on such a commission. 


This Communist Party position was made known to Generalissimo 
Chiang at a conference attended by Ambassador Hurley, Dr. T. V. 
Soong, and Dr. Wang Shih-chieh. The Ambassador reported that 
Chiang pointed out that he was calling a meeting for May 4, in 
keeping with the will of Dr. Sun Yat-sen, for the purpose of taking 
steps to draft a constitution, to pass the control of the National Gov- 
ernment to the people, and to abolish the one-party rule of the 
Kuomintang. The Generalissimo made the definite statement that in 
his opinion all the political parties in China including his own con- 
stituted less than 2 percent of the Chinese people. He believed that 
it would not be for the best interest of China to turn the control of 
the Government over to any political group or to a coalition of polit- 
ical groups. He felt it to be his duty to have a democratic constitu- 
tion for China adopted by a convention in which all the people of 
China, and not alone the organized political minorities, would partici- 
pate. He expressed his belief that the Chinese Communist Party was 
not in fact a democratic party and that it professed to be democratic 
only for the purpose of trying to achieve control of the administration 
of the National Government. The Ambassador suggested to the 
Generalissimo that he was losing valuable time and again said that 
he could afford to make political concessions and shorten the period 
of transition in order to obtain control of the Communist forces. 
Ambassador Hurley stated that the Generalissimo’s most important 
objective at the moment should be unification of the Communist mili- 
tary forces with those of the National Government. This would be 
the first step toward China’s major objectives, namely : (1) unification 
of all military forces to defeat Japan; (2) unification of China to 
prevent outside forces from keeping China divided against itself; 
(3) prevention of civil war in China and (4) a united, free, demo- 
cratic China under a democratic constitution adopted by a convention 
of the Chinese people. 

After extended discussions Dr. Wang Shih-chieh and General Chou 
En-lai were appointed to form a committee to draw up a proposal 


which “would make action possible.” On February 3 Dr. Wang 
Shih-chieh presented the following draft to the Ambassador : 

“In order to intensify our war effort against the enemy and 
strengthen our national unity, it is agreed that the National Govern- 
ment should invite the representatives of the Kuomintang and other 
parties, and some non-partisan leaders, to a consultative meeting. 
This meeting is to be named the Political Consultation Conference, 
and its membership is not to exceed persons. 

“The function of this conference is to consider: (a) steps to be 
taken in winding up the period of political tutelage and establishing 
constitutional government, (b) the common political program to be 
followed in the future and the unification of armed forces, and (c) the 
form in which members of parties outside the Kuomintang will take 
part in the National Government. 

“If the said Political Consultation Conference succeeds in reaching 
a unanimous conclusion, it will be submitted to the National Govern- 
ment for consideration and execution. During the Political Consulta- 
tion Conference, all parties should refrain from recriminations of anv 

General Chou En-lai informed the Ambassador that he was sending 
a copy of the draft by telegram to Yenan and he added that for the 
first time he felt that a basis for cooperation was being reached. 
General Hurley reported that he discussed the draft with Generalis- 
simo Chiang Kai-shek on February 4. In reporting this discussion 
the Ambassador stated that the Generalissimo said he had consented 
to the proposal but he felt that the Communists had obtained what 
they had been endeavoring to obtain all along. Ambassador Hurley 
told him “very frankly” that the only instrument heretofore with 
which he could have worked with the Communists was the five-point 
agreement ; that if he had revised that agreement at the time it was 
offered, the Communists would probably have accepted reasonable 
revision ; and that it was still the only document in which there was a 
signed agreement by the Communists to submit control of their armed 
forces to the National Government. 


In the middle of February 1945 the Ambassador summarized the 
views of the representatives of the Chinese Government during these 
discussions. According to his report, the Government representa- 
tives stated that the real purpose of the Chinese Communist Party 
was not the abolition of the one-party rule by the Kuomintang but 
rather, as indicated by all the maneuvers made by the Chinese Com- 



munists, to overthrow control by the Kuomintang Party and obtain a 
one-party rule of China by the Chinese Communist Party. The Kuo- 
mintang desired to have a democratic constitution adopted and to 
return the government to the people. It would not surrender its 
authority in these troublous times to a coterie of parties in a so-called 
coalition government. It would appoint a bi-partisan war cabinet 
with policy-making powers but would retain control of the Govern- 
ment until control was returned to the people under a democratic 
constitution. The Generalissimo stated that he wanted the Commu- 
nists to accept the latest offer of the Government, which was made in 
good faith and with every possible guarantee that their armed forces 
would not be destroyed or discriminated against. He said that the 
Chinese Communists aimed to effect a coup by which they would take 
control of the National Government and convert it into a one-party 
Communist Government similar to that of Russia. He felt that the 
Chinese Communist Party’s hopes for success were based on the fact 
that they believed that if Russia entered the war in Asia it would sup- 
port the Chinese Communists against the National Government. Chi- 
ang pointed out that notwithstanding all this, the Government had 
decided to undertake this bold measure for returning rule to the people 
in the midst of war ; that now the Government invited the Communists 
and other Party representatives, with complete freedom of travel, to 
meet on an equal status for the purpose of intensifying efforts against 
the enemy and strengthening national unity and to provide a program 
for completing the period of tutelage and establishing a democratic 
constitutional government. 


In concluding his report on these negotiations, General Hurley 
stated : “I am convinced that our Government was right in its decision 
to support the National Government of China and the leadership of 
Chiang Kai-shek. I have not agreed to any principles or supported 
any method that in my opinion would weaken the National Govern- 
ment or the leadership of Chiang Kai-shek. I have, however, on many 
occasions, advised the Generalissimo and Soong that China must fur- 
nish her own leadership, make her own decisions and be responsible 
for her own domestic and international policies.” 

General Chou En-lai left Chungking for Yenan on February 16. 
Prior to his departure he informed the Ambassador that he believed 
that his Party would agree to the Political Consultation Conference 
provided for in the proposal of the Chinese Government. He ex- 
pressed the opinion, however, that one-party rule should be immedi- 
ately ended and that a coalition administration should be instituted 


to guide China in forming a democratic government based upon a 
democratic constitution adopted by a people’s convention. General 
Hurley departed from Chungking on February 19, 1945, for consul- 
tation in Washington. 


Generalissimo Chiang, in a public address on March 1, 1945 before 
the Commission for the Inauguration of Constitutional Government, 
reaffirmed his conviction that the solution of the Communist question 
must be through political means and outlined the steps which the 
Government had taken looking toward such solution. He stated : 

“I have long held the conviction that the solution of the Communist 
question must be through political means. The Government has la- 
bored to make the settlement a political one. As the public is not well 
informed on our recent efforts to reach a settlement with the Commu- 
nists, time has come for me to clarify the atmosphere. 

“As you know, negotiations with the Communists have been a peren- 
nial problem for many years. It has been our unvarying experience 
that no sooner is a demand met than fresh ones are raised. The latest 
demand of the Communists is that the Government should forthwith 
liquidate the Kuomintang rule, and surrender all power to a coalition 
of various parties. The position of the Government is that it is ready 
to admit other parties, including the Communists as well as non-parti- 
san leaders, to participate in the Government, without, however, 
relinquishment by the Kuomintang of its power of ultimate decision 
and final responsibility until the convocation of the People’s Congress. 
We have even offered to include the Communists and other parties in 
an organ to be established along the lines of what is known abroad as 
a ‘war cabinet’. To go beyond this and to yield to the Communist 
demand would not only place the Government in open contravention 
of the Political Program of Dr. Sun Yat-sen, but also create insur- 
mountable practical difficulties for the country. 

“The Government has not hesitated to meet the issues raised by the 
Communists squarely. During his recent visit the Communist repre- 
sentative, Chou En-lai, was told that the Government would be pre- 
pared to set up in the Executive Yuan a policy-making body to be 
known as the Wartime Political Council, to which other parties, includ- 
ing the Communists, would have representation. In addition, he was 
told that the Government would be ready to appoint a Commission 
of three officers to make plans for the incorporation of the Communist 
forces in the National Army, composed of one Government officer, one 
Communist and one American, provided that the United States Gov- 
ernment would agree to allow an American officer to serve. If the 



United States Government could not agree, some other means of guar- 
anteeing the safety of the Communist forces, and non-discrimination 
in their treatment, could doubtless be evolved. 

“No one mindful of the future of our four hundred and fifty million 
people and conscious of standing at the bar of history would wish to 
plunge the country into a civil war. The Government has shown its 
readiness and is always ready to confer with the Communists to bring 
about a real and lasting settlement with them. 

“I have explained the Government’s position on the Communist prob- 
lem at length, because today that is the main problem to unity and 
constitutional government. 

“I now turn to the concrete measures which the Government pro- 
poses to take to realize constitutional government which I wish to 
announce briefly : 

“1. The People’s Congress to inaugurate constitutional government 
will be convened on November 12 this year (the 80th birthday of Dr. 
Sun Yat-sen) subject to the approval by the Kuomintang National 
Congress which is due to meet in May. 

“2. Upon the inauguration of constitutional government, all politi- 
cal parties will have legal status and enjoy equality. (The Govern- 
ment has offered to give legal recognition to the Communist Party as 
soon as the latter agrees to incorporate its army and local administra- 
tion in the National Government. The offer still stands.) 

“3. The next session of the People’s Political Council with a larger 
membership as well as more extensive powers will soon be sitting. 
The Government will consider with the council the measures in regard 
to the convening of the People’s Congress and all related matters.” 6 


On March 12, 1945, the American Embassy at Chungking was re- 
quested to transmit the following letter, 7 dated March 9 from General 
Chou to General Hurley, who was then in Washington : 

“Your kind message of 20 February has been received. 

“Under instructions from the Central Committee of my party and 
from Chairman Mao Tse-tung I have sent a letter on the 9th of March 
to Dr. Wang Shih-chieh, representative of the National Government, 
containing the following two points of which I especially would like 
to inform you about : 

9 For complete text, see China Handbook , 1987-1945, p. 73. 

T This message and a preceding one of Feb. 18 from General Chou to General 
Hurley concern the question of Chinese Communist participation on the Chinese 
delegation to the San Francisco Conference. For texts of Feb. 18 message and 
reply by General Hurley, see annexes 48 (a) and 48 (b). 


“1. The Central Committee of my party was originally planning 
to draft our proposals in answer to Dr. Wang Shih-chieh’s proposal 
of calling a political consultation conference, in order to facilitate 
the discussions, and so it was all the more unexpected that President 
Chiang Kai-shek on March 1, should have made a public statement op- 
posing the abolition of one-party rule, the convening of an inter-party 
conference and also the establishment of a coalition government, an- 
nouncing instead the one-party Kuomintang government is preparing 
to call on November 12 of this year that one-party controlled, deceit- 
ful, China splitting, so-called National Congress, based on conditions 
to which the people have no freedom, in which political parties and 
groups have no legal status, and in which large areas of the country 
have been lost making it impossible for the majority of the people to 
take part. 

“This clearly demonstrates that the Kuomintang government is ob- 
stinately insisting on having their own way alone, thus on the one 
hand showing that they have not the least sincerity of wanting to 
carry out democratic reforms, and on the other it leaves no basis on 
which negotiations between the Communist Party and the other demo- 
cratic parties and the Kuomintang government can be continued in 
these circumstances. The Central Committee of my party considers 
that there is no longer the need to draft proposals in answer to Wang 

“2. The Central Committee of my party and Chairman Mao Tse- 
tung are decidedly of the opinion that if Chinese delegates are to 
represent the common will of the whole Chinese people at the San 
Francisco Conference in April, then they must consist of representa- 
tives of the Chinese Kuomintang, the Chinese Communist Party and 
the Chinese Democratic League; and definitely there should not 
be only Kuomintang government delegates attending the meeting. 
America and England both have announced that their delegations 
will consist of representatives from all important political parties 
while your Honorable President has made known that the American 
delegation will consist of an equal number from both the Democratic 
and Republican parties ; but since the Chinese situation is so lacking 
in unity, then, if the Kuomintang should try to monopolize the en- 
tire delegation, this would be not only unjust or unreasonable, but it 
would show that their standpoint is for wanting to split China. My 
party has already officially put forth the above demands to the Kuo- 
mintang government and suggested that Chou En-lai, Tung Pi-wu 
and Chin Pang-hsien, three members of our Central Committee, join 
the Chinese delegation. If this is not accepted by the Kuomintang 
government, then my party will determinedly oppose the Kuomin- 



tang splitting measure and reserve the right of expression on all opin- 
ions and the actions of the monopolized delegation of the Kuomintang 
government at the conference of the United Nations at San Francisco. 

“Please inform your Honorable President of the above two proposals 
as soon as possible and also express my deep appreciation for his inter- 
est on behalf of Chinese unity. I extend to you my deepest personal 

In view of this sharp reaction by the Chinese Communist Party, ac- 
tive negotiations between the Communists and the National Govern- 
ment leaders looking toward the unification of China were broken off 
at this time and were not resumed until the following summer. In 
commenting on these negotiations, Ambassador Hurley stated : 

“I pause to observe that in this dreary controversial chapter, two 
fundamental facts are emerging : (1) the Communists are not in fact 
Communists, they are striving for democratic principles; and (2) 
the one party, one man personal Government of the Kuomintang is 
not in fact fascist, it is striving for democratic principles. Both the 
Communists and the Kuomintang have a long way to go, but if we 
know the way, if we are clear minded, tolerant and patient, we can be 
helpful. But it is most difficult to be patient at a time when the unified 
military forces of China are so desperately needed in our war effort.” 



Meanwhile, another problem had arisen shortly before the Ambas- 
sador’s departure for Washington. This was the problem of supply- 
ing American arms and equipment to groups in China other than the 
National Government. The Ambassador recommended that “all such 
requests, no matter how reasonable they may seem to be, be universally 
refused until or unless they receive the sanction of the National Gov- 
ernment and of the American Government.” It was his “steadfast 
position that all armed warlords, armed partisans and the armed forces 
of the Chinese Communists must without exception submit to the con- 
trol of the National Government before China can in fact have a 
unified military force or unified government.” The Ambassador fol- 
lowed this policy in connection with a request from General Chu Teh 
in January 1945 that the United States Army lend the Communist 
forces 20 million dollars in United States currency for use in procur- 
ing the defection of officers and men of the Chinese puppet govern- 
ment together with their arms and for use in encouraging sabotage 


and demolition work by puppet troops behind the Japanese lines. 
General Chu informed General Wedemeyer that his forces would as- 
sume full responsibility for repayment of the loan following victory 
over Japan and in support of his request submitted a document claim- 
ing that during 1944 Communist forces won over 34,167 Chinese 
puppet troops with 20,850 rifles, sidearms, mortars, field pieces, etc. 
The document estimated that with American financial help puppet 
defections during 1945 could be increased to 90,000 men. In com- 
menting on this proposal the Ambassador stated : 

“While financial assistance of the type requested by General Chu 
might in the end prove to be more economical than importing a similar 
quantity of arms and ammunition from the United States for use 
against Japan, I am of the firm opinion that such help would be iden- 
tical to supplying arms to the Communist armed Party and would, 
therefore, be a dangerous precedent. The established policy of the 
United States to prevent the collapse of the National Government and 
to sustain Chiang Kai-shek as president of the Government and Gen- 
eralissimo of the Armies would be defeated by acceptance of the Com- 
munist Party’s plan or by granting the lend-lease and monetary as- 
sistance requested by General Chu Teh.” 


Shortly after the arrival of General Hurley in Washington for con- 
sultation the question of supplying arms and military equipment to 
the Chinese Communist forces was raised by the American Charge 
d’Affaires at Chungking, George Atcheson, in the communication to 
the Department of State paraphrased below. The Charge had report- 
ed on February 26 that since the conclusion of negotiations with the 
Communists there had been a growing impression among observers 
there that for various reasons the Generalissimo had greatly stiffened 
his attitude toward the Communists and toward the continuing faint 
hopes held by some liberals that a settlement might still eventually 
be possible. 

It appears that the situation in China is developing in some ways 
which are neither conducive to the future unity and peace of China 
nor to the effective prosecution of the war. 

A necessary initial step in handling the problem was the recent 
American endeavor to assist compromise between the factions in 
China through diplomatic and persuasive means. Not only was 
unity correctly regarded as the essence of China’s most effective 
conduct of the war, but also of the speedy, peaceful emergence of a 
China which would be united, democratic, and strong. 



However, the rapid development of United States Army plans 
for rebuilding the armies of Chiang Kai-shek, the increase of addi- 
tional aid such as that of the War Production Board, the cessation 
of J apanese offensives, the opening of the road into China, the ex- 
pectation that the Central Government will participate at San Fran- 
cisco in making important decisions, the conviction that we are deter- 
mined upon definite support and strengthening of the Central Gov- 
ernment alone and as the sole possible channel for assistance to other 
groups, the foregoing circumstances have combined to increase 
Chiang Kai-shek’s feeling of strength greatly. They have resulted 
in lack of willingness to make any compromise and unrealistic 
optimism on the part of Chiang Kai-shek. 

Among other things, this attitude is reflected in hopes of an early 
settlement with the Soviet Union without settlement of the Com- 
munist problem, when nothing was ultimately offered except an 
advisory inter-party committee without place or power in the 
Government, and in recent appointments of a military-political 
character, placing strong anti-Communists in strategic war areas, 
and naming reactionaries to high administrative posts, such as Gen- 
eral Ho Kuo Kuang, previously Commander-in-Chief of Gendar- 
merie, as Chairman of Formosa; and Admiral Chan Chak, Tai Li 
subordinate, as mayor of Canton. 

On their part, the Communists have arrived at the conclusion 
that we are definitely committed to the support of Chiang Kai-shek 
alone, and that Chiang’s hand will not be forced by us so that we 
may be able to assist or cooperate with the Communists. Conse- 
quently, in what is regarded by them as self-protection, they are 
adopting the course of action which was forecast in statements made 
by Communist leaders last summer in the event they were still ex- 
cluded from consideration, of increasing their forces actively and 
expanding their areas to the south aggressively, reaching southeast 
China, regardless of nominal control by the Kuomintang. We 
previously reported to the Department extensive movements and 
conflicts with forces of the Central Government already occurring. 

It is the intention of the Communists, in seizing time by the fore- 
lock, to take advantage of East China’s isolation by the capture of 
the Canton-Hankow Kailway by Japan to render themselves as 
nearly invincible as they can before the new armies of Chiang Kai- 
shek, which are being formed in Yunnan at the present time, are pre- 
pared; and to present to us the dilemma of refusing or accepting 
their assistance if our forces land at any point on the coast of China. 
There is now talk by Communists close to the leaders of the need of 
seeking Soviet aid. Active .consideration is being given to the crea- 


tion of a unified council of their various independent guerrilla gov- 
ernments by the party itself, which is broadcasting demands for Com- 
munist and other non-Kuomintang representations at San Francisco. 

Despite the fact that our actions in our refusal to aid or deal with 
any group other than the Central Government have been diplomati- 
cally correct, and our intentions have been good, the conclusion 
appears clear that if this situation continues, and if our analysis of 
it is correct, the probable outbreak of disastrous civil conflict will be 
accelerated and chaos in China will be inevitable. 

It is apparent that even for the present this situation, wherein we 
are precluded from cooperating with the strategically situated, large 
and aggressive armies and organized population of the Communist 
areas, and also with the forces like the Li Chi-shen-Tsai Ting-k’ai 
group in the southeast, is, from a military standpoint, hampering 
and unsatisfactory. From a long-range viewpoint, as set forth 
above, the situation is also dangerous to American interests. 

If the situation is not checked, it is likely to develop with increas- 
ing acceleration, as the tempo of the war in China and the entire Far 
East is raised, and the inevitable resolution of the internal conflict in 
China becomes more imperative. It will be dangerous to permit 
matters to drift ; the time is short. 

In the event the high military authorities of the United States 
agree that some cooperation is desirable or necessary with the Com- 
munists and with other groups who have proved that they are willing 
and in a position to fight Japan, it is our belief that the paramount 
and immediate consideration of military necessity should be made 
the basis for a further step in the policy of the United States. A fa- 
vorable opportunity for discussion of this matter should be afforded 
by the presence of General Wedemeyer and General Hurley in 

The initial step which we propose for consideration, predicated 
upon the assumption of the existence of the military necessity, is that 
the President inform Chiang Kai-shek in definite terms that we are 
required by military necessity to cooperate with and supply the Com- 
munists and other suitable groups who can aid in this war against 
the Japanese, and that to accomplish this end, we are taking direct 
steps. Under existing conditions, this would not include forces 
which are not in actual position to attack the enemy, such as the 
Szechwan warlords. Chiang Kai-shek can be assured by us that we 
do not contemplate reduction of our assistance to the Central Gov- 
ernment. Because of transport difficulties, any assistance we give to 
the Communists or to other groups must be on a small scale at first. 
It will be less than the natural increase in the flow of supplies into 



China, in all probability. We may include a statement that we 
will furnish the Central Government with information as to the type 
and extent of such assistance. In addition, we can inform Chiang 
Kai-shek that it will be possible for us to use our cooperation and 
supplies as a lever to restrict them to their present areas and to limit 
aggressive and independent action on their part. Also we can indi- 
cate the advantages of having the Communists assisted by the United 
States instead of seeking direct or indirect help or intervention from 
the Soviet Union. 

Chiang Kai-shek might also be told, if it is regarded as advisable, 
at the time of making this statement to him, that while our endeavor 
to persuade the various groups of the desirability of unification has 
failed and it is not possible for us to delay measures for the most 
effective prosecution of the war any longer, we regard it as obviously 
desirable that our military aid to all groups be based upon coordina- 
tion of military command and upon unity, that we are prepared, 
where it is feasible, and when requested, to lend our good offices to 
this end, and although we believe the proposals should come from 
Chiang Kai-shek, we would be disposed to support the following : 

First, formation of something along the line of a war cabinet 
or supreme war council in which Communists and other groups 
would be effectively represented, and which would have some part in 
responsibility for executing and formulating joint plans for war; 
second, nominal incorporation of Communist and other forces se- 
lected into the armies of the Central Government, under the opera- 
tional command of United States officers designated by Chiang 
Kai-shek upon General Wedemeyer’s advice, upon agreement by 
all parties that these forces would operate only within their existing 
areas or areas which have been specifically extended. However, it 
should be clearly stated that our decision to cooperate with any 
forces able to assist the war effort will neither be delayed by nor con- 
tingent upon the completion of such internal Chinese arrangements. 

It is our belief that such a modus operandi would serve as an 
initial move toward complete solution of the problem of final entire 
unity, and would bridge the existing deadlock in China. The prin- 
cipal and over-riding issues have become clear, as one result of the 
recent negotiations. At the present time, Chiang Kai-shek will not 
take any forward step which will mean loss of face, personal power, 
or prestige. Without guarantees in which they believe, the Com- 
munists will not take any forward step involving dispersion and 
eventual elimination of their forces, upon which depend their 
strength at this time and their political existence in the future. 
The force required to break this deadlock will be exerted on both 


parties by the step we propose to take. The modus operandi set 
forth in these two proposals should initiate concrete military co- 
operation, with political cooperation as an inevitable result, and 
consequently furnish a foundation for increasing development 
toward unity in the future. 

The political consultation committee plan, which could function, 
if adopted, side by side with the Government and the war council, 
would not be excluded by these proposals. It should be anticipated 
that the committee would be greatly strengthened, in fact. 

Of course, the statements to the Generalissimo should be made 
in private, but the possibility would be clearly understood, in case 
of his refusal to accept it, of the logical, much more drastic step 
of a public expression of policy such as that which was made by 
Churchill with reference to Yugoslavia. 

The fact of our aid to the Communists and other forces would 
shortly become known throughout China, however, even if not 
made public. It is our belief that profound and desirable political 
effects in China would result from this. A tremendous internal 
pressure for unity exists in China, based upon compromise with 
the Communists and an opportunity for self-expression on the part 
of the now repressed liberal groups. Even inside the Kuomintang, 
these liberal groups such as the Sun Fo group, and the minor 
parties, were ignored in recent negotiations by the Kuomintang, 
although not by the Communists, with whom they present what 
amounts to a united front, and they are discouraged and dis- 
illusioned by what they regard as an American commitment to the 
Kuomintang’s existing reactionary leadership. We would prove we 
are not so committed by the steps which we proposed, we would 
markedly improve the prestige and morale of these liberal groups, 
and the strongest possible influence would be exerted by us by 
means of these internal forces to impel Chiang Kai-shek to make 
the concessions required for unity and to put his own house in 

Such a policy would unquestionably be greatly welcomed by the 
vast majority of the people of China, even though not by the very 
small reactionary minority by which the Kuomintang is controlled, 
and American prestige would be increased by it. 

The statement has been made to a responsible American by Sun 
Fo himself that if Chiang Kai-shek were told, not asked, regarding 
United States aid to Communists and guerrillas, this would do 
more to make Chiang Kai-shek come to terms with them than any 
other course of action. It is believed by the majority of the people 
of China that settlement of China’s internal problems is more a mat- 



ter of reform of the Kuomintang itself than a matter of mutual 
concessions. The Chinese also state, with justification, that Ameri- 
can non-intervention in China cannot avoid being intervention in 
favor of the conservative leadership which exists at the present time. 

In addition, by a policy such as this, which we feel realistically 
accepts the facts in China, we could expect to obtain the cooperation 
of all the forces of China in the war; to hold the Communists to 
our side instead of throwing them into the arms of the Soviet Union, 
which is inevitable otherwise in the event the U.S.S.R. enters the 
war against Japan; to convince the Kuomintang that its apparent 
plans for eventual civil war are undesirable; and to bring about 
some unification, even if not immediately complete, that would 
furnish a basis for peaceful development toward complete de- 
mocracy in the future. 

General Hurley strongly opposed the course of action recommended 
above and it remained the policy of the United States to supply 
military materiel and financial support only to the recognized Chinese 
National Government. 8 



Shortly before his visit to Washington Ambassador Hurley had 
raised the question of negotiations between the Chinese National 
Government and the Soviet Government. On February 4 the Am- 
bassador reported to the Department of State that the Chinese Gov- 
ernment contemplated sending Dr. T. V. Soong to Moscow for a 
conference as a personal representative of the Generalissimo. He 
transmitted a tentative agenda for the conference which the Chinese 
Government had prepared and added that the Chinese Government 
had asked for changes or suggestions in the agenda. His telegram 
concluded as follows : 

“In connection with this situation bear in mind that early last 
September Ambassador Harriman, Mr. Nelson and myself conferred 
with Mr. Molotov on the Soviet attitude toward the Communists in 
China, believing that understanding of this was essential to settlement 
of the Chinese Communist and National Government controversy. 
Mr. Molotov stated roughly as follows : 

8 For a detailed account of United States aid to China prior to, during and 

subsequent to this period, see chapter I, pp. 26-28, the sections on military aid and 
financial aid in Chapters V and VIII, and annexes 171 and 185. 


“ (1) The so-called Chinese Communists are not in fact Communists 
at all. 

“(2) The Soviet Government is not supporting the Chinese 

“(3) The Soviets do not desire dissensions or civil war in China. 

“(4) The Soviets complain of Chinese treatment of Soviet citizens 
in China but frankly desire closer and more harmonious relations in 
China. . . . The Chinese are anxious to ascertain if the Soviet 
attitude continues as outlined last September by Molotov. On this 
I am unable to give any definite assurances for the simple reason that 
I do not know.” 

In response to this report the Acting Secretary of State, J oseph C. 
Grew, informed the Ambassador on February 6 as follows: 

“On the subject of your telegram, we feel, and believe you will con- 
cur in our opinion, that while we are at all times anxious to be helpful 
to the Chinese Government we should not permit the Chinese Govern- 
ment to gain the impression that we are prepared to assume responsi- 
bility as ‘advisor’ to it in its relations with the USSR. Former Vice 
President Wallace, with the subsequent approval of the President, 
indicated clearly last summer to Chiang Kai-shek in response to a 
suggestion by Chiang that the United States could not be expected to 
act as ‘mediator’ between China and Russia. Furthermore, the Presi- 
dent in a message to the Generalissimo 9 transmitted through the Em- 
bassy in July 1944 stated that a conference between Chinese and 
Russian representatives would be greatly facilitated if, prior thereto, 
the Chinese Government had reached a working arrangement with the 
Chinese Communists for effective prosecution of the war against J apan. 
In a message to the Embassy at Chungking in September 1944, the 
President and the Secretary expressed views, for communicating by 
Ambassador Gauss to Chiang Kai-shek with regard to importance of 
reaching such a ‘working arrangement’. 

“With particular reference to the proposed agenda, we feel that the 
Chinese must reach their own decision with regard to what questions 
they should (or should not) discuss with the Russians and that we 
ought not take it upon ourselves to place a caveat upon or to sponsor 
discussion of any particular question. . . . With reference to your 
final and ultimate paragraphs, we have no concrete information which 
runs counter to the four points mentioned by you. We appreciate 
receiving your report on this matter and hope that you will keep us 

• This message and related ones concern the conversations between Vice Presi- 
dent WaUace and the GeneraUssimo. They will be found in annex 43 to 
chapter II. 



informed of developments. You will, of course, know best how to 
handle discussions on the subject with the Chinese in a manner which 
will be helpful to them and unprejudicial to our position.” 

By telegram dated February 18 General Hurley answered: 

“I had prepared a reply to your message which I did not send. In 
your message you appear to have reduced my role in these negotiations 
to the position of merely making a suggestion without implementing 
the suggestion. That is the method followed by Ambassador Gauss 
when he transmitted the President’s and the Secretary of State’s mes- 
sage on September 9 last. That message, as you now know, obtained 
no results whatever because it lacked vigorous implementation. I 
decided, however, not to send the telegram as I hoped to see you and 
discuss the situation more fully. It is my earnest desire to be amenable 
to every suggestion from the State Department even when I believe 
our position is weakened and accomplishment postponed by lack of 
vigorous implementation of suggestions. Perhaps this respite in nego- 
tiations and my visit with the State Department will clarify in my 
mind the distance I will be able to go in promotion of the war effort 
by inducing or compelling the unification of Chinese armed forces 
and the coordination of effort to assist us in the defeat of Japan.” 

APRIL 15, 1945 

After consultation in Washington, the Ambassador departed on 
April 3, 1945, for Chungking. He travelled by way of London and 
Moscow in order to discuss American policy in China with British 
and Soviet leaders. He reported to the Department of State that on 
the night of April 15, 1945, he had concluded a conference with 
Marshal Stalin and Foreign Minister Molotov in which the Ambassa- 
dor, Mr. Harriman, had also participated. With respect to this con- 
ference General Hurley reported to the Department that he had 
recited for Marshal Stalin in the presence of Mr. Molotov his analysis 
of Mr. Molotov’s earlier statement respecting the Soviet attitude 
toward the Chinese Communist Party and the National Government. 
His report, dated April 17, continued : 

“My analysis was briefly as follows: ‘Molotov said at the former 
conference that the Chinese Communists are not in fact Communists 
at all. Their objective is to obtain what they look upon as necessary 
and just reformations in China. The Soviet Union is not supporting 
the Chinese Communist Party. The Soviet Union does not desire in- 
ternal dissension or civil war in China. The Government of the Soviet 
Union wants closer and more harmonious relations in China. The 


Soviet Union is intensely interested in what is happening in Sinkiang 
and other places and will insist that the Chinese Government prevent 
discriminations against Soviet Nationals.’ Molotov agreed to this 
analysis. I then outlined for Stalin and Molotov existing relations 
between the Chinese Government and the Chinese Communist Party. 
I stated with frankness that I had been instrumental in instituting con- 
ferences and negotiations between the Chinese Communist Party and 
the Chinese Government. I then presented in brief form an outline 
of the negotiations, of the progress which had been made and of the 
present status. I informed Stalin that both the Chinese Government 
and the Chinese Communist Party claimed to follow the principles of 
Sun Yat-sen for the establishment of a government of the people, by 
the people and for the people in China. I continued that the National 
Government and the Chinese Communist Party are both strongly anti- 
Japanese and that the purpose of both is to drive the Japanese from 
China.- Beyond question there are issues between the Chinese Com- 
munist Party and the Chinese Government, but both are pursuing the 
same principal objective, namely, the defeat of Japan and the creating 
of a free, democratic and united government in China. Because of 
past conflicts there are many differences on details existing between 
the two parties. I made clear American insistence that China supply 
its own leadership, arrive at its own decisions, and be responsible for 
its own policies. With this in mind, the United States had endorsed 
China’s aspirations to establish a free, united government and sup- 
ported all efforts for the unification of the armed forces of China. I 
informed him that President Roosevelt had authorized me to discuss 
this subject with Prime Minister Churchill and that the complete 
concurrence of Prime Minister Churchill and Foreign Secretary Eden 
had been obtained in the policy of endorsement of Chinese aspirations 
to establish for herself a united, free, and democratic government and 
for the unification of all armed forces in China in order to bring about 
the defeat of Japan. To promote the foregoing program it had been 
decided to support the National Government of China under the lead- 
ership of Chiang Kai-shek. Stalin stated frankly that the Soviet 
Government would support the policy. He added that he would be 
glad to cooperate with the United States and Britain in achieving 
unification of the military forces in China. He spoke favorably of 
Chiang Kai-shek and said that while there had been corruption among 
certain officials of the National Government of China, he knew that 
Chiang Kai-shek was ‘selfless’, ‘a patriot’ and that the Soviet in times 
past had befriended him. I then related to Stalin and Molotov the 
request made by the Chinese Communists for representation at the 
San Francisco Conference. I told them that before leaving China I 



had advised the Chinese Communists that the conference at San 
Francisco was to be a conference of governments and not of political 
parties and that I had advised the Communists to request representa- 
tion at San Francisco through the National Government of the Re- 
public of China. I told him that this decision had been upheld by 
President Roosevelt and that the President had advised Chiang Kai- 
shek of the advisability of the National Government’s permitting the 
Chinese Communist Party to be represented on the Chinese National 
Government’s delegation to the conference at San Francisco. I told 
the Marshal that it was a very hopeful sign when Chiang Kai-shek 
offered a place on the delegation to San Francisco to a Chinese Com- 
munist and that the appointment had been accepted. I told Stalin 
that I thought it was very hopeful that a leading member of the 
Chinese Communist Party would be a delegate of the Chinese National 
Government at San Francisco. Stalin agreed that this development 
was very significant and he approved. I told him that President 
Roosevelt and Prime Minister Churchill had indicated their approval 
of the policy outlined. The Marshal was pleased and expressed his 
concurrence and said in view of the over-all situation, he wished us 
to know that we would have his complete support in immediate action 
for the unification of the armed forces of China with full recognition 
of the National Government under the leadership of Chiang Kai-shek. 
In short, Stalin agreed unqualifiedly to America’s policy in China as 
outlined to him during the conversation.” 


Although Mr. Harriman was present during the conversation re- 
ported in the foregoing communication, he departed for Washington 
on consultation before the communication was sent. The Charge 
d’Affaires in Moscow, George Kennan, sent a telegram dated April 23 
to Mr. Harriman personally in Washington commenting in part as 
follows : 

“In view of your familiarity with the matter and the opportunity 
that you now have for stating your own views to the Department I 
am of course making no comment on my own to the Department 
regarding the report of Ambassador Hurley nor did I make any to him 
since your views were not known to me, but I do want to let you know 
that it caused me some concern to see this report go forward. I refer 
specifically to the statements which were attributed to Stalin to the 
effect (1) that he expressed unqualified agreement with our policy in 
China as Ambassador Hurley outlined it to him, (2) that this policy 
would be supported by the Soviet Government and (3) that we would 


have his complete support, in particular, for immediate action directed 
toward the unification of the armed forces of China with full recog- 
nition of the Chinese National Government under the leadership of 
Generalissimo Chiang Kai-shek. . . . 

“There was, of course, nothing in Ambassador Hurley’s account of 
what he told Stalin to which Stalin could not honestly subscribe, it 
being understood that to the Russians words mean different things 
than they do to us. Stalin is of course prepared to affirm the principle 
of unifying the armed forces of China. He knows that unification is 
feasible in a practical sense only on conditions which are acceptable to 
the Chinese Communist Party. . . . 

“Actually I am persuaded that in the future Soviet policy respect- 
ing China will continue what it has been in the recent past : a fluid 
resilient policy directed at the achievement of maximum power with 
minimum responsibility on portions of the Asiatic continent lying 
beyond the Soviet border. This will involve the exertion of pressure 
in various areas in direct proportion to their strategic importance and 
their proximity to the Soviet frontier. I am sure that within the 
framework of this policy Moscow will aim specifically at: (1) Reac- 
quiring in substance, if not in form, all the diplomatic and territorial 
assets previously possessed on the mainland of Asia by Russia under 
the Czars. (2) Domination of the provinces of China in central Asia 
contiguous to the Soviet frontier. Such action is dictated by the 
strategic necessity of protecting in depth the industrial core of the 
U.S.S.R. (3) Acquiring sufficient control in all areas of north China 
now dominated by the Japanese to prevent other foreign powers from 
repeating the Japanese incursion. This means, to the Russian mind, 
the maximum possible exclusion of penetration in that area by outside 
powers including America and Britain. . . . 

“It would be tragic if our natural anxiety for the support of the 
Soviet Union at this juncture, coupled with Stalin’s use of words which 
mean all things to all people and his cautious affability, were to lead us 
into an undue reliance on Soviet aid or even Soviet acquiescence in the 
achievement of our long term objectives in China.” 

On April 19, 1945, Ambassador Harriman discussed General Hur- 
ley’s report with Mr. E. F. Stanton of the Office of Far Eastern Affairs 
of the Department of State. 

The memorandum of conversation indicated that Mr. Harriman 
felt that General Hurley’s report, while factually accurate, gave a 
“too optimistic impression of Marshal Stalin’s reactions.” Mr. Harri- 
man was certain that Marshal Stalin would not cooperate indefinitely 
with Chiang Kai-shek and that if and when Russia entered the conflict 



in the Far East he would make full use of and would support the Chi- 
nese Communists even to the extent of setting up a puppet government 
in Manchuria and possibly in North China if Kuomintang-Communist 
differences had not been resolved by that time. He indicated that he 
had impressed on General Hurley the fact that statements made by 
Stalin endorsing our efforts in China did not necessarily mean that the 
Russians would not pursue whatever course of action seemed to them 
best to serve their interests. Mr. Harriman feared that Ambassador 
Hurley might give Chiang Kai-shek an “over-optimistic account of 
his conversations with Stalin” and he thought it might be advisable 
to suggest to General Hurley that he should be careful “not to arouse 
unfounded expectations.” On April 23 Secretary Stettinius in- 
structed Ambassador Hurley as follows : 

“I attach great importance to Marshal Stalin’s endorsement at the 
present time of our program for furthering the political and military 
unity of China under Generalissimo Chiang Kai-shek. However, at 
the same time I feel, as I have no doubt you do also, the necessity of 
facing the probability that Marshal Stalin’s offer is given in direct 
relation to circumstances that are existing now and that may not long 
continue. The U.S.S.R. is at present preoccupied in Europe and the 
basis for her position in Asia following the war is not yet affected 
by the Communist-Kuomintang issue to an appreciable degree. In 
view of these circumstances I can well appreciate the logic of Marshal 
Stalin’s readiness to defer to our leadership and to support American 
efforts directed toward military and political unification which could 
scarcely fail to be acceptable to the U.S.S.R. If and w'hen the Soviet 
Union begins to participate actively in the Far Eastern theater, 
Chinese internal unity has not been established and the relative ad- 
vantages of cooperation with one side or the other become a matter of 
great practical concern to the future position of the Soviet Union in 
Asia, it would be equally logical, I believe, to expect the U.S.S.R. to 
reexamine Soviet policy and to revise its policy in accordance with its 
best interests. Consequently I believe that it is of the utmost impor- 
tance that when informing Generalissimo Chiang Kai-shek of the 
statements made by Marshal Stalin you take special pains to convey 
to him the general thought expressed in the preceding paragraph in 
order that the urgency of the situation may be fully realized by him. 
Please impress upon Generalissimo Chiang Kai-shek the necessity for 
early military and political unification in order not only to bring about 
the successful conclusion of the Japanese war but also to establish 
a basis upon which relations between China and the Soviet Union may 
eventually become one of mutual respect and permanent friendship.” 



General Hurley following his return to Chungking, in a report dis- 
cussing negotiations between the Chinese Government and the Chinese 
Communist Party stated early in July 1945 : 

“We are convinced that the influence of the Soviet will control the 
action of the Chinese Communist Party. The Chinese Communists 
do not believe that Stalin has agreed or will agree to support the 
National Government of China under the leadership of Chiang Kai- 
shek. The Chinese Communists still fully expect the Soviet to sup- 
port the Chinese Communists against the National Government. 
Nothing short of the Soviet’s public commitment will change the 
Chinese Communists’ opinion on this subject. . . . Before the Yalta 
Conference, 9a I suggested to President Roosevelt a plan to force the 
National Government to make more liberal political concessions in 
order to make possible a settlement with the Communists. The Presi- 
dent did not approve the suggestion. 

“I believe the Soviet’s attitude toward the Chinese Communists is 
as I related it to the President in September last year and have re- 
ported many times since. This is also borne out by Stalin’s state- 
ment to Hopkins and Harriman. Notwithstanding all this the Chinese 
Communists still believe that they have the support of the Soviet. 
Nothing will change their opinion on this subject until a treaty has 
been signed between the Soviet and China in which the Soviet agrees 
to support the National Government. When the Chinese Communists 
are convinced that the Soviet is not supporting them, they will settle 
with the National Government if the National Government is realistic 
enough to make generous political settlements. The negotiations 
between the National Government and the Communist Party at this 
time are merely marking time pending the result of the conference at 
Moscow. 10 

“The leadership of the Communist Party is intelligent. When the 
handwriting is on the wall, they will be able to read. No amount of 
argument will change their position. Their attitude will be changed 
only by inexorable logic of evepts. The strength of the armed forces 
of Chinese Communists has been exaggerated. The area of territory 
controlled by the Communists has been exaggerated. The number of 

9a See chapter IV. 

0 This refers to the negotiations between T. V. Sooiig and Molotov in Moscow 
which began early in July, and were continued intermittently throughout 
July and August culminating in the signing of the Sino-Soviet Treaty of Friend- 
ship and Alliance and related agreements in Moscow on Aug. 14, 1945. These 
negotiations are discussed in chapter IV. 



Chinese people who adhere to the Chinese Communist Party has been 
exaggerated. State Department officials, Army officials, newspaper 
and radio publicity have in a large measure accepted the Communist 
leaders’ statements in regard to the military and political strength 
of the Communist Party in China. Nevertheless, with the support of 
the Soviet the Chinese Communists could bring about civil war in 
China. Without the support of the Soviet the Chinese Communist 
Party will eventually participate as a political party in the National 



The Sixth Plenary Session of the Kuomintang Congress was inaug- 
urated in Chungking in May 1945. In commenting on the opening 
address of the session by Generalissimo Chiang, the Ambassador noted 
that the Generalissimo made no direct reference to the Communist 
program although he obviously did nothing to close any door against 
Communism. The Generalissimo had recently held two conferences 
with the Ambassador on the subject of unification of all anti- Japanese 
armed forces in China and had stated that while the situation was 
not moving as rapidly as desired, progress with the Communists was 
being made. 

On May 17, 1945, the Kuomintang Congress passed a resolution 
concerning the Chinese Communist problem. This resolution stated 
that the Kuomintang had consistently striven for China’s freedom 
and equality through national unity and the prosecution of the war, 
while the Chinese Communist Party, despite its pledges of 1937, “had 
persisted in armed insubordination.” The resolution pointed out 
that with the convening of the National Assembly in sight it would 
be possible to establish a constitutional government “in the not distant 
future.” It was hoped that the Communists would not fail to appre- 
ciate the difficulties confronting the nation and that an amicable 
solution would be reached. 

In another resolution adopted on May 16, 1945, the Kuomintang 
Congress stated that China harbored no territorial ambitions; that all 
China wanted was the preservation of its territorial and administra- 
tive integrity and fair and equal treatment for all its nationals over- 
seas ; that it was hoped that the five great powers would continue to 
cooperate after the war ; that friendly cooperation between the Soviet 
Union and China was especially necessary; that China would do 


everything possible to ensure the success of the San Francisco Con- 
ference; and that national unity and a constitutional government 
were the cherished objectives of Kuomintang endeavor. 

In a report to the Department, early in June, 1945, Ambassador 
Hurley stated : 

“In the view of the Chinese government the principal achievements 
of the recently concluded Sixth Kuomintang Congress are as follows : 

“1. All Kuomintang Party headquarters in the army will be abol- 
ished within three months. Similar action will be taken in the 

“2. Within six months local representation councils will be estab- 
lished in all provinces and districts in free China on the basis of 
popular elections. 

“3. A law to give legal status to political parties will be promul- 
gated and the government hopes that the Communist Party will 
qualify thereunder. In this connection, the government has re- 
iterated its intention to seek settlement of the Communist problem 
through negotiations. 

“4. Measures have been decided upon with a view to improving 
the position of peasant farmers; reduction of renting; questions of 
land tenure and land taxation. 

“5. A decision to hold a national assembly was confirmed and it is 
scheduled to convene on November 12, 1945. 

“The question of membership in the National Assembly will be 
referred to the People’s Political Council on which it is anticipated 
that all parties will be represented.” 11 

“General Hurley subsequently reported that the First Plenary Session of 
the Fourth People’s Political Council convened in Chungking on July 7, 1945, 
with 218 of 290 members present. The eight Communist members were not 
present ; a few of the twelve Democratic League Members attended. He further 
reported that on July 19 the Council adopted the following resolutions (as 
published In the Central News Agency): “(1) The date for the convocation 
of the National Assembly is to be left to the discretion of the government. (2) 
The membership of the Assembly with due regard to the legal and practical 
aspects of the issue and in accord with the opinions of the P. P. C. members 
should provide the fullest possible representation of all classes of the people 
In the country. (3) When a constitution is adopted, a constitutional govern- 
ment shall be inaugurated. (4) Prior to the convocation of the Assembly, 
the government should continue to improve all available political means for 
obtaining national unity and solidarity, to insure freedom of opinion, of publica- 
tion, of assembly, and of organized political societies and should enforce the 
Habeas Corpus Act, recognize the legal status of various political parties and 
cause the setting up of people’s representative organs in all provinces of 
free China in order to lay a solid foundation for local self-government.” 




Late in June, the Ambassador reported that pursuant to measures 
adopted by the Sixth Kuomintang Congress the Government had 
appointed a committee of seven persons including members of the 
Kuomintang and of the Democratic League and political independents 
to negotiate with the Communists. The Ambassador said that the 
Government thereupon sent a message to Mao Tse-tung, Chairman 
of the Chinese Communist Party, and Chou En-lai, Vice Chairman, 
offering to have this committee negotiate with representatives of the 
Communist Party for a unification of the armed forces of China for 
the purpose of defeating Japan. The Government had agreed to 
the recognition of the Communists as a political party in China but 
declined to recognize it as an armed belligerent or insurrection group. 
The Communists did not immediately answer and put forth consider- 
able propaganda including a “somewhat defiant” broadcast from 
Yenan on June 20 saying among other things that the Chinese Com- 
munist Party would not participate in either the People’s Political 
Council meeting to be held in Chungking beginning July 7 or the 
November Assembly. The Ambassador said that the Government had 
just received a reply from Mao Tse-tung and Chou En-lai, indicating 
that they would resume negotiations with the Government. Ambas- 
sador Hurley added : 

“Although the Communist Party of China had unquestionably been 
endeavoring recently to bring about clashes between the Communist 
troops and those of the Government (and has succeeded in causing 
some clashes, the importance of which had been exaggerated in some 
quarters), the logic of events seems to now be convincing the Com- 
munists that their best interests as a political party may be served 
by coming to an agreement with the National Government rather than 
attempting to destroy it. The decision to resume negotiations does 
not mean that the conflict has been solved. The end is not as yet in 
sight but the situation seems definitely improved.” 

The members of the committee referred to above called on the Am- 
bassador on June 27, 1945, and informed him that the committee had 
been formed to discuss the problem of unifying China, stating that 
the three political independents had been appointed by the People’s 
Political Council and that the others had volunteered their services. 
They added that they had called upon the Ambassador to seek his 
assistance and advice. The Ambassador replied that while he wished 
to be helpful, the Chinese “should not ask a foreigner to make their 
decisions for them.” His report of this meeting added: 


“I suggested that the committee should go over all the proposals and 
counter-proposals made by the Kuomintang and the Communists dur- 
ing the past six months or so, and from them endeavor to evolve a 
formula which might be acceptable to both sides. I believed that, 
as American Ambassador, it would not be proper for me to express 
an opinion on the merits of the Five-Point Communist Proposal or 
the Three-Point Kuomintang Proposal. ... I said that, when the 
committee had concluded its deliberations in Chungking, I would be 
glad to provide a plane to take them to Yenan for discussions with the 
Communists. I stated that if, when discussions were under way at 
Yenan, both the Communists and others wished me to join in the con- 
versations, I would be happy to do so. I urged that all Chinese taking 
part in the deliberations and discussions should not do so as members 
of the Kuomintang, Democratic League, Communist Party, or any 
other party or group, but as patriotic Chinese who were endeavoring 
earnestly to bring about a free, united, and democratic China.” 

On June 28, 1945, General Wang Jo-fei, the ranking Chinese Com- 
munist in Chungking at the time, called on the Ambassador. The 
Counselor of the Embassy, who was. also present during the discussion, 
made a summary of their conversation. The Ambassador recalled to 
General Wang that he had been instrumental in obtaining the inclusion 
of a Communist delegate in the Chinese Government delegation to the 
San Francisco Conference. He recalled also that he had made a trip 
to Yenan to confer with Mao Tse-tung and had brought Chou 
En-lai and others to Chungking twice for the purpose of negotiating 
with the Government for a settlement. The Ambassador said that he 
had done more in an effort to bring about a just settlement between 
the Communists and the Government than any other one man. He 
said he had been presented in the Communist press in China and else- 
where as being opposed to the Chinese Communists. The Ambassador 
said that he realized that much of the abuse was coming from people 
who were opposed to the National Government of China and did not 
desire the unification of National and Communist armies in China. 
He said that notwithstanding all these unjust and untrue accusations 
he was the best friend the Chinese Communists had in Chungking. 

The Ambassador recalled that he had assisted them in drafting 
the Communist Five-Point Proposal. He had presented that pro- 
posal to the Generalissimo. The Ambassador said that he believed 
the press and other attacks on him constituted an attempt to keep the 
Communists and the Kuomintang apart by persons who wished, for 
their own selfish reasons, to prevent the creation of a free, united, 
democratic and strong China. General Wang stated frankly that 
real communism in China under present conditions was impossible. 



The General stated, however, with perfect candor that the Party now 
supported democratic principles but only as a stepping stone to a 
future communistic state. 

The Ambassador said that he had provided a plane to take the Com- 
mittee of Seven and General Wang to Yenan on July 1; that the 
committee had requested his assistance in the discussion, but that he 
would not do so unless requested by the Communists. The Ambassa- 
dor inquired whether the Communists would be willing to join a 
steering committee to advise throughout the transition period 
(remainder of the “period of tutelage” which would presumably end 
with the adoption of a constitution by the National Assembly opening 
on November 12) and suggested ways and means to improve the 
Government. General Wang replied that this would depend on 
whether the committee had real power ; if it were only to be a commit- 
tee without real authority, then it would not be acceptable. 

The Ambassador recalled that he had brought the Communist Five- 
Point Proposal to Chungking where some Government officials had 
told him that he had “been sold a bill of goods” by the Communists. 
However, he felt that he was making progress in convincing the Gen- 
eralissimo that the proposals were generally reasonable. 

General Chou En-lai had asked that the four conditions he had 
proposed on December 28, 1944, be met by the National Government as 
conditions precedent to any agreement by the Communists on the 
Five Points which they themselves had submitted through the Am- 
bassador. The Ambassador remarked that the Government had 
already withdrawn some sixty thousand troops from the north; there 
was considerable freedom of speech and press (the Communist news- 
paper was allowed to be published in Chungking) ; the secret police 
were necessary in war time to deal with important security matters as 
witness the FBI and England’s Scotland Yard. The Ambassador said 
that if the Five-Point Proposal were agreed to, the Communists would 
then be a part of the Government and would themselves take a hand in 
the settlement of the questions included in the Four-Point Proposal 
which Chou En-lai had sent to General Hurley on December 28, 1944. 

General Wang believed that the Five-Point Proposal with some 
alterations would still be acceptable to the Communists as a basis for 
negotiations, indicating, however, that they would like to see the four 
points accepted before agreeing on the five points. The Ambassador 
told General Wang that he believed the Five-Point Proposal of the 
Communists and the Three-Point Proposal of the Government con- 
tained in themselves sufficient basis for an agreement between the 


General Wang requested that, while the Committee of Seven was 
engaged in conversations with the Communists at Yenan, the Ambas- 
sador endeavor to persuade the Generalissimo to accept the Four- 
Point Proposal as a condition precedent to further negotiations. The 
Ambassador replied that for the reasons already stated, he could not 
do so. Action on the four points should come after and not before 
an agreement with the armed Communist Party. The Ambassador 
stated frankly that nearly everyone familiar with the situation was of 
the opinion that if the Generalissimo conceded the four points prior 
to an agreement, the Communists would not enter into any agreement 
at all. 

The above-mentioned committee went to Yenan by air on July 1, 
1945, and returned on July 5 bearing a document containing new Com- 
munist proposals. According to Dr. Wang Shih-chieh, then Minister 
of Information of the Chinese Government, these proposals covered 
principally two main points: (1) that the National Chinese Govern- 
ment call off the National Assembly scheduled for November 12, 1945, 
and (2) that the Chinese Government summon a political conference 
composed on a basis of equality of three members of the Kuomintang, 
three members of the Chinese Communist Party and three members of 
the Democratic League, with an additional three members to be chosen 
from independent political parties or organizations. General Hurley’s 
own opinion was that this was the Communists’ way of playing for 
time awaiting the results of the Soong Conference at Moscow. 


Negotiations between the Communist representatives and the Na- 
tional Government continued throughout August. Mao Tse-tung 
accompanied by General Hurley who had gone to Yenan for this 
purpose, arrived in Chungking on August 28, 1945, and remained for 
about a month. The unexpected acceptance by Mao of the invitation 
to visit Chungking may well have been precipitated in part by the 
announcement of the Sino-Soviet Treaty of August 14, 1945, which 
pledged Russian support of the National Government as the only 
government of China. The Ambassador departed from Chungking 
for consultation in the United States on September 22, 1945, and 
arrived in Washington four days later. Shortly before his departure 
he submitted the following report regarding the negotiations then 
being conducted in Chungking between the National Government and 
Communist representatives : 

“(1) The negotiators have agreed that they will collaborate for the 
establishment of a democratic government in China for the reconstruc- 
tion of China and the prevention of civil war. 



“(2) Both have agreed to support the leadership of Chiang Kai- 
shek as President of the Republic. 

“(3) They have further agreed that both parties will support the 
doctrines of Sun Yat-sen and will cooperate for the establishment in 
China of a strong, democratic government. 

“(4) The Communists have agreed that they will recognize the 
Kuomintang as the dominant party in control of the government and 
will cooperate with that party during the period of transition from 
the present form of government to a democratic regime. 

“(5) Numerous other questions, including the release of political 
prisoners, freedom of person, speech, press, belief, assembly and asso- 
ciation were agreed upon. 

“There are two important points on which the conferees are not yet 
in agreement, although both parties have made concessions toward 
making agreement possible. One point is that the Communists claim 
the right to appoint, select, or elect any Communist governors or 
mayors in certain provinces. The Government contends that until a 
constitution has been adopted and a democratic government inaug- 
urated the prerogative of appointing governors and officials is vested 
in the President of the Republic. . . . The Government considers 
that this should not be changed until the transitory period from the 
present government to a constitutional government has been achieved. 
Both parties agree to work together during the transitional period. 
The next point on which the parties have approached an agreement but 
have not finally agreed is the number of Communist troops that are to 
be included in the National peace-time army of China. The Commu- 
nists first contended that they should have 48 Communist divisions. 
It was pointed out by the Government that the present plan calls for 
a peace-time army consisting of 80 to 100 divisions, and that the Com- 
munists, who the Nationalists claim are in minority, are claiming the 
right to approximately one-half of the peace-time army. . . . This, 
the Nationalists refuse to agree to, but they have offered the Commu- 
nists 20 divisions, or what will constitute approximately one-fifth of 
the planned peace-time army. Chairman Mao Tse-tung said that they 
did not reject the offer but that the Communists wanted to give it 
further consideration. 

“The overall achievement in this conference has been to keep the 
Communists and the Nationalists talking peace-time cooperation dur- 
ing the period for which civil war has been predicted by nearly all 
the elements who are supporting a policy to keep China divided against 
herself. The conferences will continue. Mao Tse-tung is remaining 
in Chungking. The Generalissimo had given Mao his word and 
pledged his character for the safe conduct of Mao and his* party. He 


has agreed to give Mao and his party transportation to Yenan at any 
time they wish to discontinue the conferences. 

“I told the Communists and Government negotiators last night that 
in my opinion they were attempting to settle too many details. ... I 
said that if they could agree on basic overall principles, details could 
be worked out in accordance with such principles. 

“The spirit between the negotiators is good. The rapprochement 
between the two leading parties of China seems to be progressing, and 
the discussion and rumors of civil war recede as the conference 

The Embassy at Chungking reported that the Ambassador had de- 
layed his departure from September 18 to September 22, to remain in 
China an additional four days upon the earnest request of both the 
Chinese Communist representatives and the Chinese Government ne- 
gotiators “to render assistance in reaching agreement.” The Embassy 
added “for the Department’s information, both parties have expressed 
deep appreciation of the cooperation and assistance of the Ambassador. 
They have agreed upon a paragraph to be included in their proposed 
final resolution thanking the Ambassador for his great services to 
China in bringing about the conference and in his general helpfulness 
as mediator during the negotiations.” In a letter to President Truman 
dated September 17, 1945, President Chiang stated that “General 
Hurley’s wise statesmanship and human qualities have won the respect 
and affection of the Chinese people who see in him a fitting symbol of 
American foreign policy of fair-play and justice. I have talked with 
General Hurley at length and with perfect frankness regarding the 
policy of my government on various questions, and have asked him to 
acquaint you, Mr. President, with the various aspects which have 
a bearing on the implementation of continued close collaboration be- 
tween China and the United States in the maintenance of peace and 
order in the Far East.” 


Negotiations continued in Chungking between the Chinese Com- 
munists and the National Government following the departure of the 
Ambassador. Early in October, Dr. K. C. Wu, the Minister of Infor- 
mation of the Chinese Government, requested the Embassy at Chung- 
king to convey the following message to General Hurley : 

“The Chinese Communists have agreed to accept the proposal by 
the National Government that they be allotted 20 divisions in the 
National Army. A military commission will decide how soon the 
forces of the Chinese Communists can be organized into 20 divisions. 



The Chinese Communists will be represented on this commission by 
the Chief of Staff, General Yeh Chien-ying and certain other officers 
designated by him. The National Government will be represented by 
General Lin Wei-wen, Vice Minister of War, and General Liu Pei, 
Vice Minister of Military Operations. 

“Furthermore, agreement has been reached that prior to the estab- 
lishment of a constitutional government the National Government will 
organize a political council of 37 members. This council will represent 
independents and all parties. The council will consider and make 
recommendations regarding (1) a draft constitution for submission 
to a people’s congress, (2) whether a people’s congress should be con- 
vened on November 12 as planned or postponed to a later date, and 
(3) a policy for peaceful reconstruction. 

“The Chinese Communists proposed that the council adopt a ‘system 
of absolute veto’. The representatives of the National Government 
have not yet agreed to this proviso which would mean that all pro- 
posals would have to receive unanimous approval before they became 

“Discussions of the political council shall be open to the public 
and not secret. Decisions adopted by it shall be final and conclusive. 
Resolutions which are adopted by it shall be carried out in accordance 
with due process of law by the National Government.” 

Mao Tse-tung returned to Yenan by plane on October 11, 1945. 
Just prior to his departure, General Chou En-lai discussed the progress 
of negotiations with a member of the staff of the American Embassy. 
From this conversation it appeared that a joint Government-Com- 
munist statement, which would probably be made public on the day 
of Mao’s departure for Yenan, was being prepared. The points of 
agreement were set forth in an official statement issued on October 11. 
Chou said that the only principal point remaining on which some sort 
of agreement had not been reached was the question of the government 
of liberated areas which were then under control of the Chinese Com- 
munists; in particular he mentioned the provinces of Hopei, Shan- 
tung, and Chahar. According to Chou the Chinese Communist Party 
desired that the governors of the liberated areas be appointed by a 
council which would be elected from districts and villages. He added 
that the Government was agreeable to elections in the districts and 
villages but insisted that the Central Government appoint directly 
provincial governors. In the opinion of the Embassy the two sides 
were far from agreement on the basic question of political control in 
the liberated areas now dominated by the Chinese Communists. On 
October 11 the Government released the text of the agreement with the 


Communists. 12 The important feature of this agreement was that it 
called for the convening of the Political Consultation Conference for 
the implementation of the agreed general principles. General Mar- 
shall was later to assist in this effort. 

In mid-October 1945 the Embassy at Chungking reported that it 
had been informed that Wang Jo-Fei had returned from Yenan, that 
Governor Chang Chun of Szechwan would arrive in Chungking in a 
few days and that upon his arrival he, together with Dr. Wang Shih- 
chieh, then Minister of Foreign Affairs, and Shao Li-tze, Secretary 
General of the People’s Political Council, would represent the Chinese 
Government in renewed conversations with the Communists, Chou 
En-lai and Wang Jo-Fei. The conversations would cover matters 
relating to the following subjects: (1) the Political Consultative 
Council; (2) liberated areas; and (3) the National Assembly. It 
was expected that the conversations would last for about ten days. 
Upon conclusion of the conversations Chou En-lai would carry back 
the proposals to Yenan for decision by the Chinese Communist au- 
thorities. The Chinese Communist authorities would then appoint 
delegates who would come to Chungking to attend the Political Con- 
sultative Conference, which it was anticipated would be held early in 
November. It had been decided that General Yeh Chien-ying, Chief 
of Staff of the 18th Army Group, would come to Chungking with the 
Communist delegates, probably as a delegate himself and also to serve 
as a Communist member of the subcommittee of three to discuss 
military questions. The Embassy at Chungking felt that the Com- 
munist representative was “definitely much more optimistic” than 
he had previously been with respect to the likelihood of an eventual 
agreement between the Central Government and the Communists, and 
had expressed great satisfaction over the announcement in the press 
that Ambassador Hurley would shortly return to China. 

Although a published statement issued by Dr. K. C. Wu, the 
Chinese Minister of Information, on October 27 indicated that the 
Government-Communist conversations were “progressing in a cor- 
dial atmosphere,” Wang Ping-nan, a Communist representative at 
Chungking, informed the Embassy that recent negotiations had made 
no progress. He expressed the opinion that the Government appar- 
ently intended to play for time while securing military control over 
areas liberated by the Communists, and he voiced the Communist re- 
sentment of what he termed “American intervention” in landing troops 
at many points in North China to hold them pending the arrival of 
Government troops, large elements of which had been flown north by 
the United States Air Force. 13 According to the Embassy, he at first 

12 See annex 49. 

a For an account of military operations in 1945 see chapter VII. 



parried a query in regard to the Manchurian situation but afterwards 
said there were in that area a few Eighth Route Army personnel. 
In the main, he said, there had been a rising up of the common people. 
He expressed the view that the U.S.S.R. would not interfere in in- 
ternal conflicts in China, preferring to let the Chinese work out their 
own problems unless the United States should give active aid to the 
Kuomintang, in which event the U. S. S. R. might find some action 


On November 4, the Embassy at Chungking reported that in the 
opinion of the Military Attache the threat of widespread civil war 
in China seemed to be growing. The Embassy pointed out that the 
gravity of the situation was demonstrated by the postponement of the 
convocation in Chungking of the newly organized Political Consulta- 
tive Conference in deference to discussions between the National Gov- 
ernment and the Communists regarding a military truce. The princi- 
pal weapon of the Communists in their efforts to prevent the Central 
Government from occupying areas dominated by them was the ef- 
fectiveness of Communist troops against the railroads in those areas. 
The Embassy had learned that the Communists had offered to refrain 
from attacking lines of communication only if the Government prom- 
ised to stop the movement of Government troops into North China. 
Since the Government had flatly refused so to do, the Embassy felt 
that the situation seemed “almost hopeless.” 


On November 10, 1945, Dr. K. C. Wu informed the Embassy in 
Chungking that on October 30 the Government had made the follow- 
ing six proposals in writing to the Communists : 

“(1) Both sides to give orders to their troops to remain wherever 
they are and not to attack the other side ; (2) the Communists to with- 
draw their troops from places along railways which they have been 
raiding and the Government will undertake not to send troops to those 
places — these sections to be guarded entirely by railway police; (3) a 
communications supervisory committee to be organized by the People’s 
Political Council with members of the People’s Political Council as 
well as other disinterested representatives from the various concerned 
localities to carry out inspections along the railway lines and report 
their findings about the situation ; (4) in case the Government finds it 
necessary to move troops along the Peiping-Suiyuan Railroad, the 
Tatung-Puchow, the Tsingtao-Tsinan, the northern section of the 


Pinghan Railroad, the eastern section of the Lunghai Railroad and the 
northern section of the Tientsin-Pukow, the Government will consult 
the Communists first in order to reach agreement; (5) both sides 
should endeavor earnestly within one month to reach a fundamental 
arrangement about reorganization of Communist troops and the allot- 
ment of places where they will be stationed ; (6) the proposed People’s 
Consultative Council should be convened at once.” In connection with 
the last point, Dr. Wu said that everyone but the Communists had 
already named delegates to the Political Consultative Conference, 
which would consist of 8 Government, 7 Communist, 13 Third Party, 
and 9 non-partisan members. 

Dr. Wu stated that the Communists had not replied until November 
8 and that their reply took the form of counter-proposals which were 
highly unsatisfactory to the National Government. 

The Political Consultative Conference scheduled to meet on Novem- 
ber 20 failed to convene with resulting increased pessimism in Chung- 
king regarding further negotiations. On November 25, General Chou 
En-lai departed from Chungking for Yenan and on the following 
day Wang Ping-nan followed him. On November 27, a provisional 
list of delegates to the Political Consultative Conference was finally 
released to the press. 

On December 1, Wang Ping-nan returned to Chungking; on De- 
cember 3, he called at the Embassy at Chungking and said that the 
Chinese Communist leaders had definitely decided to participate in 
the Political Consultative Conference and that five of the seven Com- 
munist delegates had been selected. He said that the remaining two 
would be selected and the group would fly to Chungking for a meeting 
to be held possibly about December 10. He would not venture an opin- 
ion as to the outcome of the Conference but admitted the great im- 
portance of the meeting to the future of China. In this connection, he 
said that future developments in China depended even to a greater ex- 
tent, however, on American policy toward China and that therefore the 
Communists were eagerly awaiting the arrival of General Marshall and 
an expected clarification of the American position. 14 The Embassy 
at Chungking reported that during this conversion “Wang made a 
particular point of stating that Soviet policy is one thing but that 
Chinese Communist policy is their own and independent of the Soviet 
policy. In an apparent effort to counter recent charges in the Chinese 
Government press, he emphasized that the Chinese Communists are 
particularly desirous of maintaining cordial relations with the United 

14 On Nov. 27, 1945, President Truman announced the appointment of General 
Marshall as his Special Representative in China. For an account of General 
Marshall’s mission, see chapter V. 



States, recognizing that China must have American assistance in the 
postwar period.” The Communist representatives to the Political 
Consultative Conference failed, however, to arrive in Chungking until 
December 17 with resulting delay in the convocation of the Conference. 



Meanwhile, Ambassador Hurley had submitted his resignation in a 
letter to the President, dated November 26, and his resignation had been 
accepted by the President in a letter of the following day. 10 The post 
remained vacant until the appointment of Ambassador Stuart on 
July 11, 1946. 

18 For text of General Hurley’s letter, see annex 50. On December 7, 1945, Sec- 
retary of State Byrnes answered in a public hearing before the Senate Foreign 
Relations Committee the charges against certain officers of the Department of 
State which General Hurley had raised in his letter of resignation and which he 
had amplified before the same committee on December 5 and 6. 


The Yalta Agreement and the Sino- Soviet 
Treaty of 1945 



On behalf of the United States, Great Britain and the U.S.S.R. on 
February 11, 1945, Roosevelt, Churchill and Stalin signed at Yalta an 
agreement containing the political conditions upon which the Soviet 
Union would enter the war against Japan. 1 This agreement reads as 
follows : 

“The leaders of the three Great Powers — the Soviet Union, the 
United States of America and Great Britain — have agreed that in two 
or three months after Germany has surrendered and the war in Europe 
has terminated the Soviet Union shall enter into the war against Japan 
on the side of the Allies on condition that : 

“1. The status quo in Outer-Mongolia (The Mongolian People’s 
Republic) shall be preserved ; 2 

“2. The former rights of Russia violated by the treacherous attack 
of Japan in 1904 shall be restored, viz : 

“(a) the southern part of Sakhalin as well as all the islands 
adjacent to it shall be returned to the Soviet Union, 

1 As background to the Yalta Agreement, see chapter I concerning the Cairo 
Declaration and chapter II on the conversations of Vice President Henry A. 
Wallace with Generalissimo Chiang Kai-shek in Chungking during June 1944, 
in which the latter requested the assistance of the United States in bringing 
about an improvement in Sino-Soviet relations. A summary of these conver- 
sations, prepared by a member of the Vice Presidential party, is published as 
annex 43. At the first formal meeting of the Tehran Conference Marshal Stalin 
declared that the Soviet Union would enter the war against Japan “once Ger- 
many was finaUy defeated.” The question of making Dairen a “free port under 
international guaranty” and Soviet use of the Manchurian railways were dis- 
cussed informally during the Tehran Conference. 

a The Soviet Union as a result of the insertion of “(The Mongolian People’s 
Republic)” later claimed this provision meant independence. The Chinese posi- 
tion was based on the Sino-Soviet Treaty of 1924 which had recognized Chinese 
sovereignty in Outer Mongolia. For the outcome of the discussion on this point 
see p. 117. 




“(b) the commercial port of Dairen shall be internationalized, 
the preeminent interests of the Soviet Union in this port being 
safeguarded * * 3 and the lease of Port Arthur as a naval base of the 
U.S.S.R. restored , 4 

“(c) the Chinese-Eastern Railroad and the South-Manchurian 
Railroad which provides an outlet to Dairen shall be jointly oper- 
ated by the establishment of a joint Soviet-Chinese Company it 
being understood that the preeminent interests of the Soviet Union 
shall be safeguarded 5 * * 8 and that China shall retain full sovereignty 
in Manchuria ; 

“3. The Kurile islands shall be handed over to the Soviet Union. 

“It is understood, that the agreement concerning Outer-Mongolia 
and the ports and railroads referred to above will require concurrence 
of Generalissimo Chiang Kai-shek. The President will take measures 
in order to obtain this concurrence on advice from Marshal Stalin. 

“The Heads of the three Great Powers have agreed that these claims 
of the Soviet Union shall be unquestionably fulfilled after Japan has 
been defeated. 

“For its part the Soviet Union expresses its readiness to conclude 
with the National Government of China a pact of friendship and 
alliance between the U.S.S.R. and China in order to render assistance 
to China with its armed forces for the purpose of liberating China 
from the Japanese yoke.” 


From the available evidence, it is clear that the primary motivation 
of the Yalta Agreement was military. This aspect is indicated by the 
fact that Mr. Stettinius, then Secretary of State, was informed by 
President Roosevelt that since this was predominantly a military mat- 
ter he (the President) and Mr. Harriman would handle the negotia- 

* A controversy was later to arise over this wording, the origin and authorship 
of which are still obscure. Mr. Harriman, the American Ambassador at Moscow, 

who was a participant in the discussions, subsequently stated that “there is no 
reason from the discussions leading up to the Yalta agreements to presume that 
the safeguarding of the ‘preeminent interests of the Soviet Union’ should go 
beyond Soviet interests in the free transit of exports and imports to and from 

[sic] the Soviet Union. . . .” (Italics in the original.) 

4 Mr. Harriman has commented on this provision as follows: “I believe Presi- 

dent Roosevelt looked upon the lease of Port Arthur for a naval base as an 

arrangement similar to privileges which the United States has negotiated with 

other countries for the mutual security of two friendly nations.” 

8 As regards this provision Mr. Harriman has also stated his conviction that 
President Roosevelt had in mind only transit traffic and not any general Russian 
interest in Manchuria. 


tions. Mr. Harriman has subsequently stated that Admiral King 
was aware of the projected arrangements and considered them the 
most important outcome of the Yalta Conference. 

In a conversation between President Roosevelt and Marshal Stalin 
on Far Eastern matters during the Yalta Conference, the latter 
brought up the subject of the political conditions upon which the 
Soviet Union would enter the war against Japan. In the course of 
the conversation Marshal Stalin indicated that the political condi- 
tions would have to be met because Soviet entry into the Pacific war 
“would have to be justified to Russian ‘public opinion.’ ” 

In general terms the Russian conditions were conceded. It should 
be remembered that at this time the atomic bomb was anything but 
an assured reality ; the potentialities of the Japanese Kwantung Army 
in Manchuria seemed large; and the price in American lives in the 
military campaign up the island ladder to the J apanese home islands 
was assuming ghastly proportions. Obviously military necessity 
dictated that Russia enter the war against Japan prior to the mount- 
ing of Operation Olympic (the assault upon Kyushu) , roughly sched- 
uled for November 1, 1945, in order to contain Japanese forces in 
Manchuria and prevent their transfer to the Japanese home islands. 

There was historical precedent for the specific provisions of the 
Yalta Agreement, and the subsequent Sino-Soviet Treaty and related 
agreements of 1945 provided adequate legal guarantees. It was, how- 
ever, unfortunate that China was not previously consulted. Presi- 
dent Roosevelt and Marshal Stalin, however, based this reticence on 
the already well-known and growing danger of “leaks” to the Jap- 
anese from Chinese sources due to the debilitating and suppurative 
effects of the war. Here again military exigency was the governing 
consideration. At no point did President Roosevelt consider that he 
was compromising vital Chinese interests. 


At the end of May 1945 Harry Hopkins, at the request of President 
Truman, visited Moscow. Among other topics he discussed the Far 
Eastern situation. During the discussions Marshal Stalin stated that 
the reconstruction of China would depend largely on the United 
States since Russia would be preoccupied with its own reconstruction ; 
that he proposed no alteration over the sovereignty of Manchuria or 
any other part of China, either Sinkiang or elsewhere ; that the Soviet 
system was not in existence in Mongolia ; that Generalissimo Chiang 
Kai-shek was the only Chinese leader qualified to undertake the unifi- 
cation of China ; that the Chinese Communist leaders were not as good 
or as well qualified to undertake the task ; and that he would welcome 



Chinese civilian participation in the administrative taking over of 

President Truman in Washington on June 14 repeated the fore- 
going to Dr. T. V. Soong, then Premier and Foreign Minister of China, 
who expressed his gratification. Dr. Soong pointed out that, even 
though the Yalta Agreement referred to the re-establishment of Rus- 
sian rights lost in the Russo-Japanese War of 1904, by the Sino- 
Soviet Treaty and related agreements of May 31, 1924 and the Agree- 
ment of September 20, 1924, with Chang Tso-lin, then war lord of 
Manchuria, Russia had renounced special concessions including extra- 
territoriality. He said that these points would have to be clarified. 

On June 15, 1945, Ambassador Hurley informed Generalissimo 
Chiang Kai-shek of the provisions of the Yalta Agreement pursuant 
to instructions from the President of June 9, 1945. At the same time 
the Ambassador communicated to the Generalissimo Marshal Stalin’s 
categorical assurances regarding Chinese sovereignty in Manchuria 
and his oral concurrence to the principle of the Open Door in China, 
both of which Stalin had given to the President via Harry Hopkins, 
who had been on special mission to Moscow in May- June 1945. From 
the Generalissimo’s reaction it was apparent that the Russians had 
already made the Yalta Agreement known to him. 



Sino-Soviet negotiations between Dr. T. V. Soong and Marshal 
Stalin and Foreign Minister Molotov began in Moscow during the 
first week in July 1945. Following their interruption by the Berlin 
Conference, negotiations were resumed in August with Dr. Wang 
Shi-chieh, the new Chinese Foreign Minister, replacing Dr. Soong as 
chief Chinese plenipotentiary. Dr. Soong, however, assisted Dr. 
Wang in the August negotiations. At the outset the United States 
informed the participants that it expected to be consulted prior to 
the signature of any Sino-Soviet agreement, in view of its role 
at Yalta. The American position was that the Yalta Agreement 
should be complied with — no more, no less. 

Difficulties over the interpretation of the provisions of the Yalta 
Agreement arose from the very beginning, with the Soviet Union 
interpreting the agreement to suit its own purposes. As the Soviet 
interpretation of the Yalta Agreement became increasingly apparent, 
the United States finally felt compelled to inform both parties that 
certain Soviet proposals exceeded the Yalta provisions. At the be- 


ginning of the negotiations the Soviet Union asked (1) for a con- 
trolling Soviet interest in the Chinese Eastern and South Manchurian 
Railways; (2) that the boundaries of the Dairen and Port Arthur 
leases be those of the Kwantung Peninsula lease prior to the Russo- 
Japanese War of 1904; and (3) the recognition of the independence of 
Outer Mongolia. The Chinese believed, and the United States agreed, 
that these proposals exceeded the provisions of the Yalta Agreement. 
Secretary of State Byrnes, with the approval of the President, then 
advised the Chinese Government against making any concessions 
beyond the terms of the Yalta Agreement. On August 10, 1945, Mr. 
Harriman, acting on instructions, informed Dr. Soong as a matter 
of record that the United States Government considered that the 
proposals which he had already made fulfilled the Yalta Agreement 
and that any further concessions would be with the understanding 
that they were made by the Chinese Government because of the value 
it attached to obtaining Soviet support in other directions. Mr. 
Harriman reported that Dr. Soong “thoroughly understood and 
accepted the correctness of this position.” 

A Treaty of Friendship and Alliance between the Republic of China 
and the U.S.S.R. was signed on August 14, 1945. At the same time 
notes were exchanged and agreements signed on various individual 
and related matters. 6 The Treaty pledged mutual respect for their 
respective sovereignties and mutual noninterference in their respective 
internal affairs. In the exchange of notes the Soviet Union promised 
to give moral support and military aid entirely to the “National Gov- 
ernment as the central government of China” and recognized Chinese 
sovereignty in Manchuria ; and China agreed to recognize the indepen- 
dence of Outer Mongolia if a plebiscite after the defeat of Japan con- 
firmed that that was the desire of the Outer Mongolian people. 7 The 
agreement on Dairen committed China to declare Dairen a free port 
“open to the commerce and shipping of all nations” and provided for 
Chinese administration of the port; but it exceeded Yalta by granting 
the Soviet Union a lease of half of the port facilities, free of charge. 
This agreement has not been put into effect, since Nationalist military 
and civil officials have been prevented from functioning in the Kwan- 

8 For fuU texts see annexes 51-59. 

7 One of the main preoccupations of Dr. Soong during the negotiations was to 
secure Soviet recognition of Chinese sovereignty in Outer Mongolia, even though 
this had in fact ceased to exist many years before. The Soviet Union had been the 
controlling de facto force there since the middle 1920*8 despite the Sino-Soviet 
Treaty of 1924. (See footnote 2 to this chapter.) Dr. Soong was apparently 
willing to agree to other significant and important concessions in return for Outer 
MongoUa and it was with some diflSculty that he was persuaded by Mr. Harriman 
to accept substance in place of form. 



tung Peninsula area because of the attitude of the Russians and the 
Chinese Communists. The agreement on Port Arthur provided for 
the joint use of the area as a naval base by the two Powers and extended 
the boundary of that area farther than the United States expected, 
though not to the pre-1904 boundary which the U.S.S.R. would have 
preferred. The railway agreement provided for joint ownership and 
operation of the Chinese Eastern and South Manchurian Railways. 
The Treaty and the agreements regarding Dairen, Port Arthur, and 
the railroads were to run for thirty years. 8 


On July 28 in Berlin Mr. Harriman, in a memorandum to Secretary 
Byrnes, had pointed out that since the United States Government had 
taken the initiative in inducing China to discuss matters of mutual 
interest with the Soviet Union, it was incumbent upon the United 
States to obtain recognition of the principle of the Open Door policy 
in Manchuria and to make certain that the resulting Sino-Soviet ar- 
rangements did not have the effect of giving the Soviet Union special 
advantages over American and other foreign commerce with Man- 
churia, or of shutting out foreign trade from that part of China. He 
therefore recommended that the Soviet Union be requested to give 
written assurances of support for the Open Door policy. This sugges- 
tion was approved by the Department of State on August 5, 1945. 
On August 14, however, Mr. Harriman reported that, according to 
Mr. Molotov, Generalissimo Stalin did not believe there was then 
any need for a public statement on the Open Door, “especially as he 
had given his assurances that the Open-Door Policy would be 

The Department on August 22 instructed the Ambassador in Moscow 
as follows : 

“1. The President desires that you arrange to see Stalin or, if this 
proves impracticable, Molotov, as soon as possible and present to him 
our views as given below regarding the issuance of a statement affirm- 
ing respect for the Open-Door policy in connection with the Soong- 
Stalin agreements. 

“2. The oral assurances given by Stalin, as you have indicated to 
Molotov, are satisfactory to the President. However, you should ex- 
plain clearly and forcefully the situation in this country where public 
opinion and public reaction to events of concern to the United States 

8 About Aug. 10, 1945, Dr. Soong told Mr. Harriman that agreement had been 
reached on all outstanding points. Mr. Harriman reported that Dr. Soong was 
“very grateful for our support and is convinced that unless we had taken an active 
part in the negotiations he would have had to concede to all Stalin’s demands.” 


have great weight and where the public expects and is entitled to be 
given as full a knowledge as practicable on foreign affairs which may 
affect the interests of this country. It follows, therefore, that the oral 
assurances by Stalin do not meet the situation. You may also em- 
phasize the deep interest which the American public has in Far 
Eastern events and particularly in developments pertaining to China, 
including Manchuria. In reply to Molotov’s assertion that the agree- 
ments would make it clear that no restriction would be imposed on 
foreign commerce, you may state that in so far as the agreements might 
fail to give assurances regarding full equality of opportunity and 
freedom from any form of discrimination they would fall short of 
what we would consider satisfactory. In reply to his point that no 
such statement had been foreseen at Yalta, you may say that we do 
not consider it reasonable that, simply because at Yalta the desirability 
of such assurances was not mentioned, we are therefore not entitled 
to request these assurances. 

“3. With regard to the manner in which Stalin’s assurances might 
be given public form, we suggest and would prefer that the Soviet 
and Chinese governments issue a statement, at the time of the publica- 
tion of the agreements, affirming adherence to the policy of the Open- 
Door, equality of opportunity and non-discrimination in matters re- 
lating to the management and operation of the railways and the free 
port of Dairen. We do not insist upon the particular language of the 
suggested statement as communicated by you to Stalin, but we do feel 
that any statement issued should give in clear and unequivocal terms 
the assurances we have requested and which Stalin had agreed to give. 

“4. We understand that the Chinese are prepared to issue such a 
statement and you are authorized to urge on Stalin the desirability of 
a similar statement by the Soviet Government.” 

Mr. Harriman on August 27 delivered this message to Stalin, who 
agreed that the Soviet Union would make a public statement express- 
ing support of the Open Door policy in China, including Manchuria, 
equal opportunity for trade and commerce, and freedom from dis- 
crimination for all free countries. Mr. Harriman assured General- 
issimo Stalin that the Chinese Government would make a similar state- 
ment after Stalin expressed a preference for separate statements in 
lieu of a joint Sino-Soviet one. In the same conversation Stalin said 
that he expected the National Government to send Chinese troops to 
Manchuria in the near future to take over from the Russians. He 
added that the Russian Army had as yet found no Chinese Communist 
guerrilla units in Manchuria and that he believed the National Gov- 
ernment and the Chinese Communists would reach agreement, since 
it was in the interests of both sides to do so. 



In a conversation on August 31 the Minister-Counselor of the Ameri- 
can Embassy discussed the proposed statement with the Chief of the 
American Section of the Soviet Foreign Office. The latter seemed 
to be under the impression that the United States had in mind a state- 
ment concerning China in general. The Minister emphasized, how- 
ever, that the United States was concerned with Manchuria since the 
statement was intended to relate to the Sino-Soviet arrangements 
regarding the Russian position in that area. 

On September 6 General Hurley informed the Department that 
the suggestions for a statement had been made at a time when the 
attitude of the Soviet Union toward the National Government of 
China had not been publicly and officially stated. The Ambassador 
believed that publication of the Sino-Soviet Treaty and related agree- 
ments had altered the situation : “The publication of these documents 
has demonstrated conclusively that the Soviet Government supports 
the National Government of China and also that the two governments 
are in agreement regarding Manchuria.” 

In mid-September Mr. Harriman reported a conversation a few 
days earlier between the Chinese Ambassador in Moscow and Andrei 
Vyshinsky, Soviet Deputy Foreign Minister, in which the latter had 
asked for a draft of the proposed statement by the Chinese Govern- 
ment. The Chinese Ambassador added that Dr. Soong was most 
anxious to have the statement issued but that when he (the Chinese 
Ambassador) had informed Chungking of the request from Vyshinsky 
he had been informed that the question had been referred to Dr. Wang 
Shih-chieh, the Chinese Foreign Minister, who was then in London 
attending the First Session of the Council of Foreign Ministers. In 
the end, however, the Chinese Government seemingly took the posi- 
tion that the Sino-Soviet Treaty constituted a sufficient guarantee, 
since it did not again raise the question. The Soviet Union, which 
from the beginning had been reluctant, also seems to have allowed the 
question to lapse. 


On August 16, 1945, Generalissimo Chiang Kai-shek informed 
Ambassador Hurley that agreement had been reached with the Soviet 
Union and that he was “generally satisfied with the treaty.” In re- 
porting this conversation to the Department Ambassador Hurley 
added that his reports “showed the Generalissimo has always doubted 
the Soviet’s position in regard to relations with the Chinese Com- 
munists. Yesterday he thanked me for the basis that I had helped 
him to lay for rapprochement with the Soviets. He admitted that 
the Sino-Soviet treaty indicates (1.) an intention on the part of the 


Soviets to assist in bringing about unification of the armed forces 
in China; (2) an intention to support Chinese efforts to create a 
strong, unified and democratic government; and (3) an intention 
to support the National Government of China.” In conclusion, 
General Hurley said that “Chiang Kai-shek will now have an oppor- 
tunity to show realistic and genuine leadership. He will have an 
opportunity to show his qualifications for leadership of the Chinese 
people in peace as well as in war. I am with the Generalissimo fre- 
quently. I insist continuously that the Chinese people must be 
responsible for their own policies, select their own leadership, and 
make their own decisions.” 

In a conversation of August 21 with Ambassador Hurley the 
Chinese Foreign Minister, Dr. Wang Shih-chieh, who had just returned 
to Chungking, “expressed himself as being satisfied with the results 
and said that proceedings would commence at once for the approval of 
the treaty and the notes exchanged between the Soviet and Chinese 

On August 29, Madame Chiang Kai-shek, who was then in the 
United States, called on the President. She complimented him on 
the results of the Sino-Soviet conversations and expressed apprecia- 
tion to the United States Government for the assistance which it had 
given to the Chinese plenipotentiaries in working out these agree- 
ments. The President said that that had been one of his principal 
objectives in going to Berlin and that he felt strongly that China 
should be supported in working out the arrangements which had been 
initiated by President Roosevelt. 

Despite criticism of the Sino-Soviet arrangements of August 14, 
1945, and as indicative of the* value which the Chinese Government 
attached to them, Dr. Wang Shih-chieh as late as September 14, 1947, 
in a conversation with General Marshall, then Secretary of State, con- 
cerning the question of the veto power as applied to the J apanese peace 
treaty, expressed his opposition to the elimination of the veto power 
because of his fears that the Soviet Union “would interpret this, for 
its own convenience, as virtually cancelling the Sino-Soviet Treaty.” 
The Foreign Minister was concerned at the reaction this would have 
on the situation in China. 

Editorial comment in both Nationalist and Chinese Communist 
territory expressed approval of the Sino-Soviet Treaty and related 
agreements at the time they were made public. 


At the time that the Sino-Soviet Treaty and related agreements 
were made public the United States supported the arrangements. In 



a statement issued on August 27, 1945, Secretary Byrnes said that he 
believed that the treaty and accompanying agreements constituted an 
‘‘important step forward in the relations between China and the 
Soviet Union.” He added that the United States welcomed this 
development “as a practical example of the continuing unity and 
mutual helpfulness which should characterize the acts of members of 
the United Nations in peace as well as in war.” 

Nevertheless early in September the American Embassy in Moscow 
registered a note of caution regarding the significance of the Sino- 
Soviet arrangements and their relation to the historic course of Rus- 
sian imperialism. In a telegram of September 10, 1945, to the Depart- 
ment the American Embassy in Moscow summarized its views with 
respect to Russian intentions in the Far East as follows: 

“1. The pact was not necessary for the achievement of any im- 
mediate objectives now being obtained by the Red Army. Regardless 
of the existence of the pact these objectives, including the military 
occupation of Manchuria and the Liaotung Peninsula, could and would 
have been achieved. 

“2. The effect of the agreements concerning Manchuria should cause 
no illusion. Russian willingness to withdraw its forces and to admit 
Chinese to civil affairs control reflects mature statesmanship on the 
part of Stalin and his Moscow advisers. The initial Russian position 
as an occupying power, together with greater proximity and the far 
greater discipline of Russian power, should make it easy for the Rus- 
sians to remain masters of the situation even after Russian troops have 
withdrawn. It was tacitly understood by both parties to the Moscow 
negotiations that Chinese officials in Manchuria would for the most 
part have to be amenable to Russian influence. Chinese Communist 
forces, according to recent broadcasts, have been ordered to enter Man- 
churia and in cooperation with the Russian army, to accept the Japan- 
ese surrender. Logically, the Russian authorities and their sym- 
pathizers will encourage the use of these Communist forces in the ad- 
ministration of Manchuria after the evacuation of the Russian Army. 
It should also be realized that local Russian authorities, in matters 
concerning the internal affairs of neighboring countries, do not always 
exercise the same restraint as does the Kremlin. 

“3. Nothing in the internal regime of Outer Mongolia will be 
changed with its independence. The only effect will be its elimination 
as a possible source of future Chinese irredentism and an increase in 
its usefulness as an instrument for future Russian expansion. 

“4. Russian assurances of support to the National Government and 
of non-interference in internal Chinese affairs reaffirms what has 
existed for some time. It is probable that any Kremlin control over 


the Chinese Communists has been through the Party apparatus and 
not through government channels. It seems likely that this situation 
will obtain in the future— namely, control through the Party. The 
bargaining position of the Chinese Communists on the basis of implied 
military support is undoubtedly weakened by the Russian assurances. 
On the other hand, these assurances (a) remove any excuse for a Sino- 
American crusade against the Chinese Communists as a spearhead 
of Russian penetration of China, (b) to a considerable extent dispel 
general suspicion of Russian intentions in China and thus disarm 
average critics of the Russian role there, and (c) place Russian policy 
in China on a high and disinterested moral plane. In the meantime, 
the Russian Communist Party can continue to support the Chinese 
Communist program of “democratization,” and to exert political pres- 
sure on the National Government to compromise. 

“5. There should be no misunderstanding of Russian intentions 
toward Japan and Korea simply because of superficial Russian modera- 
tion on Manchuria. In the Russian zone of Korea Communist-trained 
Korean elements are already being given responsibility for civil affairs. 
It is a natural tendency or even a deliberately conceived policy for the 
Russians to seek maximum internal influence in near-by areas through 
use of persons trained to accept their discipline and to share their 


About the same time the United States became disturbed over de- 
velopments in Manchuria. Upon the defeat of Japan, the Soviet 
Union accepted the surrender of Japanese forces in Manchuria, as well 
as in southern Sakhalin and the Kurile Islands. While its troops were 
in Manchuria, the Soviet Government removed considerable Japanese- 
owned industries and equipment from Manchuria, on the ground that 
such property was “war booty” because it had been used to support 
the Japanese war effort. The United States protested these removals 
to the Soviet Union on a number of occasions, objecting not only to 
the inclusion of these industries in the concept of war booty, but also 
to the unilateral action of the Soviet Government in removing Japa- 
nese industries from Manchuria. The United States took the position 
that the disposition of Japanese property in Manchuria should be 
decided by an Inter- Allied Reparations Commission for Japan on the 
same basis as for Japanese external assets located in other countries. 851 

When the Soviet Union proposed to China early in 1946 that control 
of Japanese industrial enterprises in Manchuria be shared by agree- 
ment between the two states, the United States informed both China 

See annex 60. 



and the Soviet Union that the establishment of such exclusive bilateral 
control would be contrary to the principle of the Open Door and would 
constitute clear discrimination against Americans who might wish to 
participate in the development of Manchurian industry. 


At the Moscow Conference of the Foreign Ministers of the United 
Kingdom, the United States and the Soviet Union, in December 1945, 
the United States proposed that the question of transfer of control of 
Manchuria to the Chinese National Government be included on the 
agenda of the Conference. Mr. Molotov, the Soviet Foreign Min- 
ister, would not agree to the inclusion of this question. He explained 
that it was not necessary inasmuch as the Soviet Union had a special 
agreement with China concerning Manchuria and that there were no 
differences between the two countries on the subject. He said that 
the evacuation of Russian troops from South Manchuria was com- 
pleted and that the evacuation from North Manchuria would have 
been completed if the Chinese Government had not requested that it 
be delayed for a month. Mr. Molotov insisted, however, on discussing 
the presence of United States troops in North China. Secretary 
Byrnes agreed to do so in connection with the disarming, of Japanese 
forces in North China. 

During the several meetings at which this question was discussed, 
Mr. Byrnes made the point that American forces in China were merely 
assisting in the demobilization of J apanese troops and their deporta- 
tion from the area. He indicated that this task had been assumed 
from a feeling of responsibility for the maintenance of peace in North 
China which was one of the motives prompting the dispatch of Gen- 
eral Marshall on special mission. Mr. Molotov stated that the evacua- 
tion of Russian troops from Manchuria would be completed by 
February 1, 1946, and that the Chinese simply wanted to get others to 
do their work. He added that it was intolerable that there were still 
Japanese forces which had not yet been disarmed. He called attention 
to a Soviet memorandum of December 21 which objected to “other 
foreign troops” assisting in the disarming of Japanese forces in China 
and demanded that the United States agree with the Soviet Union on 
a date not later than the middle of January 1946 for simultaneous 
evacuation of their respective forces from China. In this memoran- 
dum the Soviet Government declared that it adhered to a policy of 
non-interference in the internal affairs of China and indicated that 
“other states” should do likewise. Mr. Byrnes reiterated that the 
United States was merely carrying out its responsibilities and denied 
that the United States was interfering in Chinese internal affairs. He 


emphasized that the United States desired a unified and united China, 
and asked for Soviet cooperation to that end. In a subsequent con- 
versation with Secretary Byrnes, Generalissimo Stalin also objected 
to the use of American troops in the demobilization of Japanese 
forces in China. 

The communique issued at the close of the Moscow Conference con- 
tained the following statement regarding China : 

“The three Foreign Secretaries exchanged views with regard to the 
situation in China. They were in agreement as to the need for a 
unified and democratic China under the National Government, for 
broad participation by democratic elements in all branches of the 
National Government, and for a cessation of civil strife. They reaf- 
firmed their adherence to the policy of noninterference in the internal 
affairs of China. 

“Mr. Molotov and Mr. Byrnes had several conversations concerning 
Soviet and American armed forces in China. 

“Mr. Molotov stated that the Soviet forces had disarmed and de- 
ported Japanese troops in Manchuria but that withdrawal of Soviet 
forces had been postponed until February 1st at the request of the 
Chinese Government. 

“Mr. Byrnes pointed out that American forces were in north 
China at the request of the Chinese Government, and referred also 
to the primary responsibility of the United States in the implementa- 
tion of the Terms of Surrender with respect to the disarming and 
deportation of Japanese troops. He stated that American forces 
would be withdrawn just as soon as this responsibility was discharged 
or the Chinese Government was in a position to discharge the respon- 
sibility without the assistance of American forces. 

“The two Foreign Secretaries were in complete accord as to the 
desirability of withdrawal of Soviet and American forces from China 
at the earliest practicable moment consistent with the discharge of 
their obligations and responsibilities.” 


Because Dairen was not opened to commercial vessels in the months 
following the surrender of Japan, the United States on two occasions 
during 1947 protested to the Soviet Government on the grounds that 
American commercial activity was hindered by the* port’s not being 
opened to traffic. The Soviet Union replied by referring to the pro- 
vision of the agreement regarding Dairen of August 14, 1945, which 
stated that, in case of war with Japan, Dairen was to come under the 
control of the military regime authorized for the Port Arthur naval 
base area. The Soviet Union added that in as much as the war with 



Japan had not been terminated, there being no peace treaty, Dairen 
came under the administration of the Port Arthur naval base. The 
Soviet Government also stated that it “sees no basis for a change of the 
regime” under which Dairen remained closed to commercial intercourse 
with other countries. Thus the United States protests were of no 


At the time that the Sino-Soviet Treaty and related agreements 
were concluded they were generally considered in the most favorable 
light. It was thought that the arrangements would provide a firm 
basis for peaceful and harmonious relations between the two countries. 
The Yalta Agreement had, of course, been dictated by military neces- 
sity and the vital importance of ensuring the entry of the Soviet Union 
into the Far Eastern war before the Allied invasion of Japan which 
had been set for the autumn of 1945. Although the unexpectedly 
early collapse of J apanese resistance later made some of the provisions 
of the Yalta Agreement seem unnecessary, the Agreement and the sub- 
sequent Sino-Soviet Treaty in fact imposed legal limitations on the 
action which Russia would, in any case, have been in a position to take. 
At Yalta, Marshal Stalin not only agreed to declare war on Japan 
within two or three months after V-E Day but limited his “price” 
with reference to Manchuria substantially to the position which 
Russia had occupied there prior to 1904. In the Sino-Soviet Treaty, 
furthermore, the Soviets agreed to give the National Government of 
China moral and material support and moreover formalized their 
assurances of noninterference in Chinese internal affairs. In view 
of world developments since the conclusion of hostilities against 
Japan, especially in recent years, there is no evidence to suggest that 
the absence of such arrangements would have restrained the Soviet 
Union from pursuing Russia’s long-range traditional objectives. 
Even though the Soviet Union has not seen fit to honor its signed 
agreements in practice, their existence has had, as the National 
Government itself has admitted, moral and legal advantage for that 


The Mission of General George C. Marshall 

1945 - 1947 1 




After the successful termination of the war against Japan, and at 
the time General Hurley left Chungking, there were several elements 
in the situation which plausibly argued that prospects for peace and 
reconstruction in China were reasonably good. The negotiations be- 
tween the National Government and the Chinese Communists had 
reached a stage of agreement on general principles and General 
Hurley himself felt that agreement on details and implementation was 
by no means impossible. Both participants in the negotiations still 
professed their desire and intention to seek a political settlement and 
there could be little doubt that the overwhelming popular demand was 
for peace. 

Perhaps the most important factor immediately after V-J Day was 
the economic situation, which, despite the brutal and devastating 
effects of eight years of war, was surprisingly good and contained 
many elements of hope. 


In China proper, although there had been serious wartime dis- 
ruption in certain sectors of the economy, the productive potential of 
agriculture, mining, and industry in most of the area taken from the 
Japanese was not substantially different from that of 1937. The 
expulsion of the Japanese from Manchuria and Formosa promised 
to increase several-fold the national industrial plant and to contribute 
to the achievement of national self-sufficiency in food. Such economic 
problems as could be foreseen in the late summer of 1945 related less 

1 The bulk of the material for this chapter has been drawn from the files of 
General Marshall’s Mission. 




to the reconstruction of productive equipment than to the organization 
of production and distribution through facilities already available. 

Except in those parts of Central and South China which had been 
subjected to active military operations in 1944-1945, production of 
foodstuffs was at or near prewar levels, but agricultural production 
had shifted significantly away from cash crops, such as cotton, to 
food crops for local consumption. Heavy losses were inflicted on 
inland and coastal shipping during the war years, and the railroad 
from Peiping to Canton and others in South China had suffered 
serious damage, but the efficiency of the greater portion of railroad 
facilities was only moderately impaired. The number of motor 
vehicles in operation had actually increased somewhat during the war. 
Coal production had increased by about 25 percent under Japanese 
management. On the other hand, electric power supply in China 
proper decreased significantly because of the loss of over one-quarter 
of prewar generating capacity. 

Wartime changes in industrial capacity were not important, except 
in the iron and cotton textile industries. Despite destruction of facil- 
ities at Hankow by retreating Chinese forces, total pig iron capacity 
was increased by about 50 percent over prewar levels during the occu- 
pation. Cotton spinning capacity, however, fell sharply. A full year 
after Japanese surrender little more than half of the prewar total of 
nearly 5 million spindles was in operation. An additional 1.4 million 
spindles were reparable but w T ere not expected to be brought into pro- 
duction for another year. The principal economic effects of eight 
years of war and invasion appear to have been not so much the 
destruction of wealth or the diversion of production into new channels 
as the suspension of the process of industrialization and the disrup- 
tion of the new national monetary system. 

In regaining Manchuria, China would inherit the extensive 
industrial complex built by the Japanese and a rich agricultural 
area capable of producing a substantial export surplus. With 
about one-fourth of the total area and one-ninth the population, Man- 
churia had come to possess an industry over four times as large as that 
of China proper, and an electric generating capacity nearly three 
times as large. The density of Manchuria’s rail net was over four 
times as great as that of China proper. 

China’s economic gains in resuming administration over For- 
mosa after a lapse of 50 years were smaller than, but similar in 
nature to those in prospect on V-J Day in Manchuria. Formosa also 
had traditionally a large export surplus of agricultural products. 
Japanese industrial achievements were less impressive in Formosa 


than in Manchuria, but a wartime boom had given Formosa a sub- 
stantial productive capacity in aluminum, petroleum products, and 
electric power, in addition to its older capacity in sugar refining and 
other food exporting industries. Both agriculture and industry in 
Formosa, however, had suffered severely during the war. Irrigation 
works and crops themselves had suffered heavy typhoon damage in 
1944 and 1945, and food production had declined for lack of adequate 
fertilizer. Industry, the electric power distribution system, and 
harbor facilities were crippled by Allied bombing in the last months 
of the war. 


China’s foreign exchange holdings at the conclusion of the war with 
Japan were by far the largest in the history of that country. The 
principal fiscal asset of the Chinese Government at the end of the war 
against Japan was its unprecedentedly large reserves of gold and 
U. S. dollar exchange, which were estimated to total over 900 million 
United States dollars on December 31, 1945. The accumulation of 
these reserves had been made possible by virtue of the nondisburse- 
ment of a substantial portion of the 500 million dollar American 
credit authorized in 1942, and by United States Government pay- 
ments during the war of approximately 400 million dollars to the 
Chinese Government against advances of Chinese currency and 
Chinese Government expenditures on behalf of the 'United States 
Army. In addition to these reserves of the Chinese Government, 
private Chinese held very substantial foreign exchange assets, most 
of which could be used to finance imports into China. Although com- 
plete data regarding private Chinese holdings of gold, silver and 
other foreign exchange assets is not available, it has been estimated 
conservatively that such holdings on V— J Day amounted to at least 
several hundred million United States dollars. 

Optimism based upon China’s very favorable foreign exchange 
position was tempered by realization of the magnitude of the recon- 
struction task in some parts of the economy, as well as the necessity 
of immediate large-scale imports of food and industrial raw ma- 
terial. Pending the re-establishment of normal internal trade, in- 
dustrial production could be maintained and consumer welfare pro- 
tected only by the purchase abroad of relatively large quantities of 
such essential commodities as cotton and grain. Reconstruction was 
most urgently needed in the field of transportation. Substantial 
assistance in obtaining the abnormal volume of imports needed in 
connection with postwar reconstruction and rehabilitation was an- 



ticipated from Unrra. The ultimate soundness of the international 
financial position of the Chinese Government depended, however, on 
the speed with which export industries and remittances from Chinese 
overseas regained their prewar levels. 

The Chinese Government also faced financial problems of a large y 
domestic nature. Inflationary methods of finance had been resorted 
to during the war as the only means of maintaining resistance against 
the Japanese in the face of the loss of the richest part of the national 
territory, the disruption of normal trade, and the disorganization of 
public administration. Bringing the wartime inflation to a halt was 
essential to post-war economic recovery, but such action depended 
upon an expansion of revenues and a reduction in military expendi- 
tures. After the war, the Government regained control of the great- 
est revenue producing areas of China proper, and, of course, looked 
forward to the Manchurian and Formosan economies as rich sources 
of revenue. The extensive industrial properties taken over from 
the Japanese promised to provide the Government with a new and 
non-inflationary source of funds. No accurate appraisal of the value 
of these properties is available but, in addition to the major Govern- 
ment properties acquired in Manchuria and Formosa, the Chinese 
Government fell heir to Japanese cotton mills in China proper with 
a total of almost two million spindles, representing nearly half of 
the nation’s cotton spinning industry, as well as various other 
Japanese-owned industrial facilities. 

In prospect, the Government’s financial position on V-J Day was 
reasonably bright. The inter-related problems that it faced both do- 
mestically and internationally were sizable, but at the same time it 
possessed assets which appeared capable of making a large contribution 

to their solution. 


Despite the favorable elements in the negotiations and in the eco- 
nomic situation there was reason during the fall of 1945 for grave con- 
cern that the prospects of peace and stability in China serious 
jeopardy. The Chinese Communists had refused to recognize orders 
issued by the National Government concerning acceptance of surrender 
of Japanese and Chinese puppet troops and were proceeding, insofar 
as their capacity permitted, to accept such surrender, to seize enemy 
materiel, and to occupy enemy territory. The result was a series of 
increasingly frequent and widespread clashes between the armed forces 
of the Government and of the Chinese Communist Party. These 
clashes spread to other areas as well, to such an extent that competent 
observers had grave doubts as to the possibility of a peaceful settlement. 



On November 14, 1945, Lieutenant General Albert C. Wedemeyer, 
Commanding General, China Theater, reported to Washington that 
the National Government was completely unprepared for occupation 
of Manchuria in the face of Communist opposition. He also re- 
ported his recommendation to the Generalissimo that the Chinese 
should adopt the immediate objective of consolidating the areas south 
of the great wall and north of the Yangtze and of securing the over- 
land line of communications in that area prior to entry into 

Again on November 20, 1945, he reported as follows : 

“I have recommended to the Generalissimo that he should concen- 
trate his efforts upon establishing control in north China and upon the 
prompt execution of political and official reforms designed to remove 
the practice of corruption by officials and to eliminate prohibitive 

General Wedemeyer also recommended the utilization of foreign 
executives and technicians, at least during the transition period. He 
then added : 

“Chinese Communist guerrillas and saboteurs can and probably 
will, if present activities are a reliable indication, restrict and harass 
the movements of National Government forces to such an extent that 
the result will be a costly and extended campaign. . . . Logistical 
support for National Governmental forces and measures for their 
security in the heart of Manchuria have not been fully appreciated 
by the Generalissimo or his Chinese staff. These facts plus the lack 
of appropriate forces and transport have caused me to advise the 
Generalissimo that he should concentrate his efforts on the recovery 
of north China and the consolidation of his military and political 
position there prior to any attempt to occupy Manchuria. I re- 
ceived the impression that he agreed with this concept.” 

Among General Wedemeyer’s conclusions at that time were the 
following : 

“1. The Generalissimo will be able to stabilize the situation in south 
China provided he accepts the assistance of foreign administrators 
and technicians and engages in political, economic and social reforms 
through honest, competent civilian officials. 

“2. He will be unable to stabilize the situation in north China for 
months or perhaps even years unless a satisfactory settlement with the 
Chinese Communists is achieved and followed up realistically by the 
kind of action suggested in paragraph 1. 



“3. He will be unable to occupy Manchuria for many years unless 
satisfactory agreements are reached with Russia and the Chinese 

“4. Russia is in effect creating favorable conditions for the realiza- 
tion of Chinese Communist and possibly their own plans in north 
China and Manchuria. These activities are violations of the recent 
Sino-Russian Treaty and related agreements. 

“5. It appears remote that a satisfactory understanding will be 
reached between Chinese Communists and the National Government.” 

The final recommendation of General Wedemeyer was the establish- 
ment by the United States, Great Britain and Russia of a trusteeship 
over Manchuria until such time as the National Government had be- 
come sufficiently strong and stabilized to assume responsibility of full 
control over the area. One of the principal reasons which led Gen- 
eral Wedemeyer to the above conclusions was his conviction that 
National Government abuses and malpractices had already created 
serious discontent among the local population in areas taken over from 
the Japanese, and even this soon after the end of the war against Japan 
had seriously alienated a considerable amount of sympathy for the 
National Government. 

It is against this checkered background that the mission of General 
Marshall should be considered. 


When President Truman announced on November 27, 1945, his 
acceptance of Ambassador Hurley’s resignation, he announced also the 
appointment of General of the Army George C. Marshall as his Spe- 
cial Representative in China, with the personal rank of Ambassador. 
In the instructions which he addressed to General Marshall on De- 
cember 15, la the President asked the General to bring to bear the in- 
fluence of the United States to the end that the “unification of China 
by peaceful, democratic methods” might be achieved as soon as pos- 
sible and concurrently to endeavor to effect a cessation of hostilities, 
particularly in North China. To assist in the accomplishment of this 
mission General Marshall was authorized to speak to Generalissimo 
Chiang Kai-shek and other Chinese leaders “with the utmost frank- 
ness” and to state that “a China disunited and torn by civil strife” 
was not a proper place for American economic assistance in the form 
of credits or technical assistance nor for American military aid. 

lR See annexes 61, 62. 



A portion of General Marshall’s instructions, in the form of a 
Presidential statement on United States policy toward China, was 
released on December 15 for publication the following day. lb Stating 
that a “strong, united, and democratic China” was of the utmost 
importance to world peace, the President declared that it was “in the 
most vital interest of the United States and all the United Nations 
that the people of China overlook no opportunity to adjust their in- 
ternal differences promptly by methods of peaceful negotiation.” He 
called for a cessation of hostilities in China, but pledged that there 
would be no American military intervention to influence the Chinese 
civil fighting, explaining the presence of American troops in North 
China in terms of the necessity for disarming and evacuating sur- 
rendered Japanese troops still on Chinese soil. 

President Truman further urged the convening in China of a na- 
tional conference of the major Chinese political elements to develop 
a solution to the problems of China which would not only end internal 
strife but would also bring about unification of the country on terms 
which would give all major political elements fair and effective repre- 
sentation in the Chinese Government. This obviously meant modifi- 
cation of the Kuomintang’s system of “political tutelage” and the 
broadening of the base of government. The President pointed out 
that the detailed steps necessary to the achievement of political unity 
in China must be worked out by the Chinese themselves and disowned 
any intention of intervening in these matters. He declared, however, 
that China and all parties and groups in China had a clear responsi- 
bility to the other United Nations to eliminate armed civil conflict, 
which was a threat to world stability and peace. 

The President concluded by promising American assistance, as 
China moved toward peace and unity, in the rehabilitation of the 
country, in the improvement of the industrial and agrarian economy, 
and in the establishment of a military organization “capable of dis- 
charging China’s national and international responsibilities for the 
maintenance of peace and order.” 


In the light of these instructions General Marshall undertook the 
execution of his mission immediately upon his arrival in Chungking. 
The complex problems in China fell largely under three heads — 
political, military and economic— but they frequently became so en- 
tangled that discussion of them cannot be separated. This was par- 
ticularly true of the political and military problems, for the two 

3b For full text see annex 62. 



principal Chinese parties to the negotiations in which General Mar- 
shall took part, the National Government and the Chinese Communist 
Party, frequently made military action or inaction a sine qua non for 
a political concession, or vice versa. 

The President’s Special Representative acted both as an intermedi- 
ary between Generalissimo Chiang Kai-shek and the representatives 
of the Chinese Communist Party and as an adviser to or member of 
certain bodies, or committees, which were established in the effort to 
reach agreement on China’s problems. He also exercised initiative in 
giving each side impartially and confidentially the benefit of his 
analysis of the situation as it developed, and in drafting various state- 
ments and agreements which he thought might move the negotiations 

Throughout his mission General Marshall kept the President and 
the Secretary of State fully informed of the progress of the negotia- 
tions, of his actions in connection with these negotiations and of his 
estimate of the situation in China. His actions and decisions had the 
unqualified support and approval of the President and the Secretary 
of State. 

The negotiations themselves were most difficult and most complex. 
As it turned out General Marshall was often unable to bring the two 
sides to complete agreement on a set of terms before the situation 
changed, frequently as a result of what he considered bad faith on one 
side or the other, and a new set of proposals based on the new situa- 
tion became the basis of discussion. This chapter largely forms a 
narrative, therefore, of the constantly shifting situations, proposals, 
counterproposals, and discussions, starting with the political and 
military situation which General Marshall found in China upon his 
arrival. Economic matters concerning Sino-American relations dur- 
ing the period of the Marshall mission, however, have been separated 
from the rest of this narrative insofar as possible and grouped together 
toward the end of the chapter. 


Dr. Sun Yat-sen’s program for China had envisaged a period of 
“political tutelage” under the Kuomintang as the necessary prepara- 
tion for the establishment of constitutional government in China. 
The Kuomintang had thus been committed to end its one-party con- 
trol of government and to convene a National Assembly for the pur- 
pose of adopting a constitution and forming a new government, and 
a draft constitution had actually been promulgated by the National 
Government on May 5, 1936. A National Assembly had been sched- 



uled to be convened in November 1937 to adopt the constitution, but 
the outbreak of hostilities with J apan had resulted in a postponement 
of this Assembly. Preparations for the convening of the Assembly 
had continued, however, during the war with Japan and at a meet- 
ing of the Kuomintang Central Executive Committee in September 
1943, Generalissimo Chiang Kai-shek had indicated that with the es- 
tablishment of representative institutions the Kuomintang would lose 
all special privileges and other parties would be equal to it in rights 
and freedoms. The Generalissimo had also stated on September 13, 

“. . . I am of the opinion that first of all we should clearly recog- 
nize that the Chinese Communist problem is a purely political prob- 
lem and should be solved by political means.” 

The Central Executive Committee had accordingly passed a resolution 
providing that within one year after the conclusion of the war the 
National Government was to convene a National Assembly to adopt 
and promulgate a constitution. Shortly thereafter, the Generalis- 
simo appointed a committee of 53, including 2 Communist representa- 
tives, to lay the groundwork for constitutional government. In May 
1944 a Communist representative held preliminary conversations at 
Sian with two high-ranking National Government representatives and 
later proceeded to Chungking where further discussions were held for 
a settlement of the differences between the Government and the Chinese 

In subsequent discussions between the National Government and 
the Chinese Communist Party at Chungking shortly after V-J Day 
agreement was reached regarding steps to be taken toward the es- 
tablishment of a constitutional government. The exact formula was 
set forth in the Text of the Summary of National Government-Com- 
munist Conversations issued at Chungking on October 11, 1945, and 
referred to above. 2 

This text provided that questions which were not settled during 
these conversations should be referred to a “Political Consultative 

It will be noted that President Truman’s statement of December 15, 
1945, was entirely consonant with the publicly stated pledges of the 
Chinese Government and the Generalissimo regarding a peaceful set- 
tlement of the Communist problem and with the agreement reached 
between that Government and the Chinese Communist Party in Octo- 
ber 1945 providing for the convening of the “Political Consultative 
Conference” to discuss measures looking toward the establishment of 

2 See chapter III. 



a constitutional Government. A provisional list of the delegates to 
this Conference had been published at Chungking on November 27. 
On December 31, 1945, the National Government announced that the 
Generalissimo had decided that the Political Consultative Conference 
would convene at Chungking on January 10, 1946. 



Prior to the convening of the Conference, the National Government 
presented to the Chinese Communist Party a proposal for the cessa- 
tion of hostilities, in which it suggested the formation of a committee 
composed of a representative of the National Government and a rep- 
resentative of the Chinese Communist Party, with General Marshall 
as Chairman, to discuss the question of the cessation of hostilities and 
related matters. The Chinese Communist Party having agreed to 
the formation of this committee, General Chang Chun was appointed 
as the National Government representative and General Chou En-lai 
as the Chinese Communist Party representative. This Committee, 
called the Committee of Three, held its first formal meeting on J anuary 
7, 1946. 

During the early conversations of General Marshall with National 
Government leaders and Chinese Communist Party representatives in 
Chungking the basic distrust between the two groups was apparent. 
The National Government was convinced that the U.S.S.B. had ob- 
structed the efforts of the National Government to assume control 
over Manchuria in spite of the provisions of the Sino-Soviet Treaty 
of August 1945 and that the Chinese Communists were tools of the 
U.S.S.B. The Chinese Communist Party was suspicious of the Kuo- 
mintang and believed that its aim was the destruction of the Chinese 
Communist Party. The Government leaders were unwilling to per- 
mit Communist participation in the Government until the Communists 
had given up their armed forces, while the Communists believed that 
to do so without guarantees of their legal political status would end 
in their destruction. 

In the light of the statement of American policy toward China, which 
pointed out that the United States, the United Kingdom, and the 
U.S.S.B. were committed by various agreements with the Chinese 
Government to the return of all China, including Manchuria, to 
Chinese control, General Marshall envisaged a solution which would 
be in accord with these agreements and which would result in bringing 
this area under the control of a unified China. 


With that end in view, he had informed General Chou En-lai on 
January 4 that the United States Government was committed to the 
movement of National Government troops to Manchuria. General 
Chou expressed his agreement to the inclusion of an exception in the 
cessation of hostilities agreement to permit the movement of National 
Government troops into Manchuria and added that the movement of 
such troops conformed to American policy and to the Sino-Soviet 
Treaty of August 1945. 

The Committee of Three reached an agreement on January 10 for 
the cessation of hostilities. In accordance with this agreement, both 
the Generalissimo and Mr. Mao Tse-tung, Chairman of the Chinese 
Communist Party, issued orders to their respective armed forces to 
cease hostilities and halt all movements of troops, with certain ex- 
ceptions which were included in stipulations regarding the cease-fire 
order and were made public in a press release. 3 These stipulations 
provided for the movement of National Government troops into and 
within Manchuria for the purpose of restoring Chinese sovereignty 
and for the movement of National Government troops south of the 
Yangtze River in connection with the Government military reorgani- 
zation plan. The cease-fire order was to be effective at midnight on 
January 13, thus allowing time for the transmission of the order to 
commanders in the field. The order further provided for the cessation 
of destruction of and interference with all lines of communication 
and for the removal of obstructions placed against or interfering 
with such lines. 

The agreement also provided for the establishment of an Executive 
Headquarters at Peiping to carry out the agreement for the cessation 
of hostilities. 4 This headquarters, which began its official functions 
on January 14, was to consist of three commissioners, one representing 
the National Government, one representing the Chinese Communist 
Party, and one representing the United States. The National Gov- 
ernment and the Chinese Communist Party were to have equal repre- 
sentation in the operations section of the Executive Headquarters and 
in the teams to be sent to the field to carry out on the spot the pro- 
visions of the cease-fire order and the directives of the headquarters. 
The necessary instructions and orders agreed upon unanimously by 

3 See annex 63. 

4 See annex 71 for full text of the document establishing the Executive Head- 
quarters and for a memorandum on operations of the Executive Headquarters. 
American military and naval personnel in China were also charged with certain 
functions concerning repatriation of Japanese, a task which was fulfilled with 
the highest degree of effectiveness so that by the end of 1946 a total of almost 
3,000,000 Japanese military personnel and civilians had been repatriated to 
Japan. A memorandum on this operation is also included in annex 71. 



the three commissioners were to be issued in the name of the Presi- 
dent of the Republic of China. It was made clear that American 
participation in the headquarters was solely for the purpose of 
assisting the Chinese members in the implementation of the cease-fire 


The agreement for the cessation of hostilities enabled the Political 
Consultative Conference (hereafter called the PCC) to convene in an 
atmosphere of peace. The PCC, which was in session at Chungking 
from January 10 to 31, 1946, was composed of representatives of the 
Kuomintang, the Chinese Communist Party, the Democratic League, 
and the Youth Party and of non-party delegates. It met as a con- 
sultative body without any legal authority to enforce its decisions. 
Morally, all groups represented were obligated to accept the decisions, 
but legally the PCC resolutions were subject to approval by the central 
committees or governing bodies of the various parties represented. 

At the opening session of the PCC, Generalissimo Chiang Kai-shek 
announced the decision of the Government to grant immediately cer- 
tain fundamental democratic rights. They included freedom of 
speech, assembly, and association; equal legal status for all political 
parties ; the holding of popular elections ; and the release of political 
prisoners. On January 31, the PCC held its final session and released 
to the press the text of the resolutions agreed upon. 5 These resolutions 
were divided into five main headings as follows: (1) Government 
Organization; (2) Program for Peaceful National Reconstruction; 
(3) Military Problems; (4) Agreement on the National Assembly; 
and (5) the 1936 Draft Constitution. 

In his address to the closing session of the PCC, the Generalissimo 
made the following statements regarding the PCC resolutions : 6 
“I wish to declare first on behalf of the Government that they will 
be fully respected and carried out as soon as the prescribed procedures 
have been completed. I pledge at the same time that I will uphold this 
program faithfully and will also see to it that all the military and 
civil subordinates follow it strictly. From now on, I will, whether 
in the Government or out of it, faithfully and resolutely observe, as 
a citizen should, all the decisions of this Conference.” 

In contrast to the Generalissimo’s statements, however, there were 
indications of strong opposition to the PCC resolutions among power- 
ful reactionary groups in the Kuomintang. Minority party reaction 
to the decisions of the PCC was shown in the issuance of categorical 

6 See annexes 64, 65, 66, 67, 68. 

0 As reported by the Kuomintang Ministry of Information. 


statements by the Chinese Communist Party, the Democratic League, 
and the Youth Party of their intention to carry out the PCC 

General Marshall did not act as a mediator or participate in the 
discussions of the Political Consultative Conference. In accordance 
with the Generalissimo’s request, he did, however, have prepared a brief 
draft of an act for possible promulgation by the National Government 
which included a bill of rights, a provision for drawing up a constitu- 
tion to be submitted to the National Assembly in May and a provision 
for the establishment of an interim coalition government reposing in 
the Generalissimo power of control as the President of all China prior 
to the formation of the constitutional government. This draft was 
presented to the Generalissimo on a confidential basis on January 23. 


The PCC resolutions provided for convening a National Assembly 
on May 5, 1946, for the purpose of adopting a constitution and for 
the formation of a Constitution Draft Committee to draw up a 
detailed plan for revision of the 1936 Draft Constitution based on 
the principles agreed upon by the PCC, as well as recommendations 
of various associations connected with the promotion of constitu- 
tionalism in China. This plan was to be submitted to the National 
Assembly for adoption. The PCC resolutions also provided that, pend- 
ing the convening of the National Assembly, the Kuomintang would 
revise the organic law of the National Government to make the State 
Council the supreme organ of the Government in charge of national 
affairs. This Council was to be composed of 40 members, who would 
be chosen by the Generalissimo from Kuomintang and non-Kuomin- 
tang members. Half of the Councillors would be members of the 
Kuomintang and half members of other parties and non-party per- 
sonnel. The specific allotment of seats of non-Kuomintang Coun- 
cillors was to be the subject of separate discussion after the adjourn- 
ment of the PCC. The PCC resolutions regarding the State Council 
empowered the President to veto any decision of the Council, and 
such a veto could be overridden only by a three-fifths vote of the 
Council. General resolutions would require a majority vote of the 
Councillors present, but any resolutions involving changes in the 
administrative policy would be required to have a two-thirds vote of 
the members present for approval. However, a majority vote of 
the members present would be sufficient to decide whether a resolu- 
tion involved a change in administrative policy. The PCC resolutions 
regarding the membership of the State Council and the question of 
the veto power subsequently played an important part in the negotia- 



tions between the Chinese Government and the Chinese Communist 
Party. The question of the veto power arose in discussions regarding 
membership in the State Council. The Chinese Communist Party 
began to advance claims for control of at least 14 seats in the Council 
among its own members and friendly nominees. With this number 
the Chinese Communist Party would have sufficient voting strength 
to exercise a veto to prevent changes in the PCC resolutions. 

Under the Program for Peaceful National Reconstruction of the 
PCC resolutions, the equality and legality of all political parties were 
recognized and all parties were pledged to recognize the national 
leadership of President Chiang Kai-shek. The program provided 
inter alia for the maintenance of the status quo in liberated areas 
where the government was under dispute until a settlement should 
be made by the National Government after its reorganization, a point 
of considerable importance in later negotiations. 

Under the PCC resolutions on military problems, provision was 
made for reorganization and reduction of the armies and the creation 
of a national army belonging to the State in which no political parties 
would be allowed to carry on political activities. It was also pro- 
vided that the “Three-Man Military Commission” should agree upon 
practical methods for the reorganization of the Chinese Communist 
armies at an early date. It was further provided that, when the 
reorganization of both the National Government and Communist 
armies should be completed, all armies should again be reorganized 
into 50 or 60 divisions. 

FEBRUARY 25, 1946 

On January 10 the National Government suggested the formation 
of a military committee to draw up measures for the reorganization 
and redisposition of the Chinese armies. Such a committee had al- 
ready been agreed to by the National Government and the Chinese 
Communist Party during the negotiations ending in October 1945. 
The Chinese Communist Party representatives agreed to this proposal 
and both the Chinese Government and the Chinese Communist Party 
expressed their approval of General Marshall’s participation in this 
committee as an adviser. This committee, known as the Military Sub- 
committee, was composed of General Chang Chih-chung as the Na- 
tional Government representative, General Chou En-lai as the Chinese 
Communist Party representative and General Marshall as adviser. 

The Military Subcommittee held its first meeting on February 14, 
1946, and on February 25 reached an agreement entitled “Basis for 
Military Reorganization and for the Integration of the Communist 
Forces into the National Army.” In the press release announcing 


the agreement, 7 it was explained that the purpose of the agreement 
was to facilitate the economic rehabilitation of China and at the same 
time to furnish a basis for the development of an effective military 
force capable of safeguarding the security of the nation, including 
provisions to safeguard the rights of the people from military in- 
terference. It was also pointed out that the Executive Headquarters 
at Peiping would be charged with responsibility for supervising the 
execution of orders necessary to the implementation of the agreement 
and that the measures to be decided upon by the Military Subcom- 
mittee for the execution of the terms of the agreement would be carried 
out over a period of 18 months. 

The terms of the agreement envisaged the reduction of the National 
Government armies to 90 divisions at the end of 12 months and the 
reduction of the Chinese Communist forces to 18 divisions during 
that same period. A further reduction at the end of the following 
6 months provided for 50 National Government divisions and 10 
Communist divisions, the total of 60 divisions of not more than 14,000 
men each to be formed into 20 armies. The process of integration was 
provided for initially during the seventh month. The National Gov- 
ernment and the Chinese Communist Party were required under the 
agreement to make provisions for the supply, movement and employ- 
ment of their respective demobilized personnel, the National Govern- 
ment to assume this responsibility for all demobilized personnel as 
soon as practicable. For purposes of integration and deployment, 
China was divided into five general areas as follows : Northeast China, 
Northwest China, North China, Central China and South China 
(including Formosa) and a specific number of armies was provided 
for each area at the end of the 12-month period and again at the end 
of the full 18-month period. Provision was made for the following 
distribution of the armed forces at the end of 18 months : Northeast 
China (Manchuria) — 14 National Government divisions and 1 Com- 
munist division; Northwest China — 9 National Government divisions; 
North China — 11 National Government divisions and 7 Communist 
divisions; Central China — 10 National Government divisions and 2 
Communist divisions; and South China (including Formosa) — 6 
National Government divisions. 

In discussions leading to this agreement, General Marshall en- 
deavored to emphasize as strongly as possible the necessity of creating 
in China a national, nonpolitical military force along the lines of 
western military tradition, to be used as a democratic army and not as 
an authoritarian weapon. The agreement reached was based upon the 
general principle of separating the army from politics and, although 

See annex 69. 



this idea was not expressly stated in the agreement, the various articles 
adhered to this general plan. This principle was of the greatest 
importance in China, where political power in the final analysis was 
dependent upon the possession of military force and where the military 
constantly interfered with civil administration or were themselves 
legally in control of civil administration by appointment to office. In 
a brief speech at the time of the signing of this agreement General 
Marshall made the following statement: “This agreement, I think, 
represents the great hope of China. I can only trust that its pages 
will not be soiled by a small group of irreconcilables who for a selfish 
purpose would defeat the Chinese people in their overwhelming desire 
for peace and prosperity.” 

The agreement required the National Government to prepare and 
submit to the Military Subcommittee, within 3 weeks of the promulga- 
tion of the agreement, a list of the 90 divisions to be retained and the 
order of demobilization of units during the first 2 months. Such a list 
was submitted on March 26. The agreement similarly provided for the 
preparation and submission to the Committee by the Chinese Com- 
munist Party, within 3 weeks of the promulgation of the agreement, 
of a complete list of all its military units, together with a list of the 
18 divisions to be retained and the order of demobilization of units 
during the first 2 months — a provision with which the Communists 
never complied. It was further provided that within 6 weeks after 
the promulgation of this agreement both the National Government 
and the Chinese Communist Party should furnish to the Committee 
lists of the units to be demobilized. 

Agreement was reached by the Military Subcommittee on February 
27, 1946, on a directive 8 to the Executive Headquarters implementing 
the basic plan for military reorganization and integration of the Com- 
munist armies into the National Army. The directive, signed on 
March 16, 1946, established the Executive Headquarters as the agency 
for the execution of the basic plan and provided for the formation of 
a group in the headquarters, composed of National Government, 
Chinese Communist Party, and United States personnel, to plan and 
supervise the execution of the plan. The directive also provided for 
the complete disbandment within 3 months of Chinese puppet units 
who had served the Japanese and for the establishment of a 12- week 
basic training program for the National Government and Communist 
Party divisions to be retained. The directive recommended the estab- 
lishment of a Demobilized Manpower Commission, which should co- 
ordinate its efforts with those of the Government, the Communist 

8 See annex TO. 


Party, civilian agencies, relief organizations, and the Executive Head- 

The conclusion of the agreement for military reorganization marked 
the third major step in bringing peace to China and in establishing 
a basis for unification of the country. The cessation of hostilities 
agreement was designed to bring to a halt actual fighting in order 
that negotiations for a political and military settlement could be car- 
ried on in an atmosphere of peace. The PCC resolutions represented 
an agreement on the questions of governmental reorganization and 
the establishment of a constitutional government. The Basis for 
Military Reorganization similarly provided an agreement on the 
question of integration of the Communist Party armed forces into 
the National Army and the reorganization of all armies in China 
on a democratic base. 

It should be noted that the political and military agreements recog- 
nized the preponderant strength of the Kuomintang position in the 
National Government. In the interim State Council, which was to 
function until the establishment of constitutional government through 
action of the National Assembly, the Kuomintang was allocated 20 
of the 40 seats. The President was empowered to veto any decision 
of the Council and his veto could be overriden only by a three-fifths 
vote of the members of the Council. Under the military reorgani- 
zation plan, the preponderant strength of the National Government 
was recognized by provision for a National Government superiority 
of 5 to 1 in relation to the Communist forces, by which at the end of 
the 18-month reorganization and integration period the National 
Army would have 50 Government and 10 Communist divisions. 


The immediate reaction of the Chinese public to the cessation of 
hostilities and the announcement of the PCC resolutions was one of 
enthusiastic approval, tempered by the realization that the imple- 
mentation of the resolutions would be the acid test by which the sin- 
cerity of the two rival parties could be gauged. The indication of 
strong resentment against the PCC on the part of powerful groups 
within the Kuomintang and the opposition by a powerful group of 
National Government Army generals to any reorganization of the 
armies which would threaten their position were seen as obstacles, 
on the Kuomintang side, to successful implementation of the resolu- 
tions. Disquieting incidents, such as an attack by alleged Kuomin- 
tang plain-clothes men on a mass meeting held at Chungking to cele- 
brate the success of the PCC, police interference with minority party 
delegates to the PCC, and an attack on the Communist Party news- 

** See Annex 71. 



paper premises at Chungking, all served to strengthen the fears of 
opposition to the PCC by irreconcilable elements in the Kuomintang. 


The next step in connection with the PCC resolutions of January 31 
was that of obtaining legal action by the National Government to 
approve these resolutions. The Central Executive Committee (here- 
after called the CEC) of the Kuomintang met at Chungking from 
March 1 to 17 for the purpose of passing upon the PCC resolutions. 
Simultaneously with the CEC sessions, there were also held at Chung- 
king meetings of the PCC Steering Committee and the PCC Constitu- 
tional Reviewing Committee, in which discussions were held of points 
which the CEC reportedly wished to have revised. Although the CEC 
announced at the end of its sessions that it had approved the PCC 
resolutions in toto , 9 there were indications that approval had been 
hedged by reservations and that irreconcilable elements within the 
Kuomintang were endeavoring to sabotage the PCC program. Their 
efforts were reportedly directed toward revisions of the principles 
approved by the PCC as the basis for revising the Draft Constitution 
and toward obtaining close adherence to the May 1936 Draft Consti- 
tution, on which the Kuomintang had originally insisted in the PCC 

Discussions regarding the PCC resolutions continued in the PCC 
Steering Committee after the adjournment of the Kuomintang CEC 
on March 17. During this period the Communist Party and Demo- 
cratic League representatives maintained the general position that the 
PCC resolutions had been agreed upon by duly authorized representa- 
tives of all parties and indicated that they would oppose any major 
changes in the resolutions. The Communist Party and Democratic 
League, therefore, refused to nominate members to the State Council 
for participation in a reorganized government until the Kuomintang 
should publish a statement of any revisions of the PCC resolutions 
agreed upon and of a definite commitment by the Kuomintang to 
implement the PCC program as revised. In the meantime, the Com- 
munist Party postponed its Central Committee meeting, originally 
scheduled for March 31 for the purpose of passing upon the PCC reso- 
lutions. Under these circumstances the PCC Constitutional Review- 
ing Committee suspended its w T ork upon preparation of a revised 
constitution to submit to the National Assembly, still scheduled to meet 
on May 5, but later postponed and not convened until November. 

9 See annex 72. 



Following the signing of the military reorganization agreement 
General Marshall had recommended to President Truman that he be 
recalled to Washington for a brief visit. He felt that he should report 
to the President on the situation in China and he was particularly 
anxious to take up the question of the transfer of surplus property and 
shipping and the problem of loans to China. He also wished to make 
a personal presentation of the situation in China regarding Unrra 
and famine conditions. He was of the opinion that he should make 
a brief visit to obtain financial and economic facilities to aid China 
and return to China in time to assist in adjusting differences which 
were certain to arise over the major problems connected with the 
agreements reached. It was his opinion that steps had to be taken 
to assist China and its people in the increasingly serious economic 
situation and to facilitate the efforts being made toward peace and 
unity in China and toward the establishment of a unified defense 
force. General Marshall felt that Chinese political and military unity 
could only be consolidated and made lasting through the rehabilitation 
of the country and the permanent general improvement of economic 
conditions. President Truman approved the recommendation and 
formally recalled him to Washington for these purposes. He accord- 
ingly departed for Washington on March 11, 1946. 



The cease-fire agreement of January 10, 1946, made no mention 
of any exemption of any part of China from its provisions, except 
in regard to the movement of troops, and there was no implication 
or indication in the meetings of the Committee of Three that Man- 
churia was not included within the scope of the cessation of hostilities 
order. General Marshall felt very strongly that the authority of the 
Executive Headquarters in Manchuria should be asserted in order to 
avoid possible future clashes and difficulties between the two opposing 
Chinese forces if the Russian troops should withdraw from Man- 
churia. The matter was complicated by the continued delay in the 
withdrawal of Russian troops, resulting in suspicion on the part of the 
National Government of Russian intentions and aims in Manchuria 
and in the consequent inability of the National Government to assume 
control in that area. 

With these circumstances in mind and as a result of reports of fight- 
ing at Yingkow, a port in south Manchuria, General Marshall pro- 



posed on January 24, 1946, that an Executive Headquarters field team 
be sent immediately to Yingkow and that in the event of future inci- 
dents of this kind similar action be taken. 10 The National Govern- 
ment was unwilling to agree to this proposal, although the Chinese 
Communist Party gave its approval. On February 20 General Mar- 
shall again, but without success, proposed that field teams be sent to 
Manchuria, pointing out the need of such teams both in stopping 
possible conflicts and in establishing a basis for the demobilization 
of the armies under the plan for military reorganization and integra- 
tion. While the Chinese Communist Party acquiesced in this pro- 
posal, the National Government remained adamant in spite of a de- 
terioration of the situation in Manchuria. At this stage the National 
Government seemed determined to incur no restraints on its freedom 
of action in Manchuria and appeared bent on a policy of complete 
military occupation of the area and elimination of the Chinese Com- 
munist forces if they were encountered, even though it did not have 
the military capability of achieving these objectives. 

It was not until March 11, the day of General Marshall’s departure 
for Washington, that the Generalissimo finally agreed to the entry of 
Executive Headquarters field teams into Manchuria, but with numer- 
ous conditions stipulated, so that agreement on a directive for the 
entry of the teams into Manchuria was not reached until March 27. * 11 
This directive was not, however, sufficiently broad to enable the teams 
to bring about a cessation of the fighting, which meanwhile was 
developing into a dangerous situation for the National Government 

In addition to this difficulty, there was a justified complaint by the 
Chinese Communists that the National Government commander at 
Canton had violated the terms of the cessation of hostilities order by 
refusing to recognize the authority of the Executive Headquarters in 
his area of command, and that the Supreme Headquarters of the 
National Government armies at Nanking had failed to carry out the 
specific stipulation of the cease-fire order to report all movements of 
the National Government troops to the Executive Headquarters at 
Peiping. There had been, of course, a number of minor infractions 
of the cease-fire order by subordinate commanders on both sides. 
There was also a difficult problem in the north Hupeh-south Honan 
area where about 60,000 Communist troops, encircled by Government 
troops, were having difficulty in obtaining food supplies. 

The extended delay in the sending of teams to Manchuria, caused 
first by the National Government’s refusal to give its approval for such 

10 See annex 73. 

11 See annex 74. 


action and later by the inability of the two Chinese representatives to 
agree on a suitable directive for the teams, had already resulted in a 
serious situation. The Chinese Communist Party in Manchuria was 
steadily extending the area of its control. The Russian withdrawal 
from Manchuria, originally scheduled to be completed by December 3, 
1945, had been postponed until February 1, 1946, in accordance with 
an agreement between the Chinese and Soviet Governments. In early 
March, however, the Chinese Government formally requested the with- 
drawal of the Russian forces from Manchuria. Subsequent to this 
request, the Soviet Government agreed to the progressive and com- 
plete withdrawal of its armies beginning on April 6 and ending on 
April 29. When the Russian troops did withdraw toward the north, 
the National Government found itself with extended lines of com- 
munication and limited railroad rolling stock. Although it had ap- 
proximately 137,000 troops in Manchuria and the adjoining areas of 
Jehol Province by mid-March, these were insufficient to move into all 
the areas evacuated by the Russian armies in time to prevent their 
occupation by the Chinese Communists. The Chinese Communist 
forces were moving both into areas from which Russian troops were 
withdrawing and into the hinterland between the lines of communica- 
tion where there had been no occupation forces. The movement 
of National Government troops into and within Manchuria for the 
purpose of restoring Chinese sovereignty had been provided for in 
the cease-fire agreement. The entry of the Chinese Government forces 
had, however, been seriously impeded by the Russian refusal to permit 
their use of Dairen as the port of entry and their continued advance 
subsequent to their entry had been blocked by the delay in the Russian 
withdrawal. This delay also had the effect of giving the Chinese 
Communists time to build up their forces in Manchuria, which had 
apparently been reinforced by the movement of hastily organized or 
reinforced units from Chahar and Jehol Provinces. While these 
movements had begun in August and September 1945, there was 
evidence of the unauthorized continuation of the movement after J an- 
uary 13, 1946. Chinese Communist political infiltration was also 
facilitated by the delayed Russian withdrawal. In addition, the 
Chinese Communists were enabled to take over and put into use among 
their troops stores of weapons and military supplies possessed by the 
Japanese at the time of their surrender and made available directly 
or indirectly by the Russians. 

Further delay and increased distrust between the National Govern- 
ment and the Chinese Communists had resulted from the actions of 
the National Government commander in Manchuria in seeking to 
establish military control in the rural areas removed from the main 



lines of communication, there being no Executive Headquarters field 
teams to moderate or regulate the procedure where National Govern- 
ment and Chinese Communist forces were in contact. These tactics 
had brought him in violent conflict with Chinese Communist forces in 
the hinterland, who were thus in a position to level the accusation 
that his chief aim was to eliminate their forces rather than to restore 
Chinese sovereignty in Manchuria. 

This situation made a solution of the political impasse immeasurably 
more difficult, as it created considerable misgivings among the Chinese 
with regard to the relationship of the Chinese Communists to the Soviet 
Union and strengthened the position of irreconcilable elements within 
the Kuomintang, which would have been opposed to the political solu- 
tion offered by the PCC resolutions under any circumstances. The sit- 
uation in Manchuria, however, presented them with a plausible excuse 
for resisting any limitation of Kuomintang governmental authority 
under such circumstances. Chinese Communist resentment and sus- 
picions, in turn, were aroused by the obvious intention of the National 
Government to assume complete military and political control in Man- 
churia through new administrative appointees for Manchurian posts 
from among the most anti-Communist elements in the Kuomintang. 

In spite of the deterioration in the general situation, agreement was 
reached in the PCC Steering Committee on April 1 in regard to the 
National Assembly. Following this agreement, however, subsequent 
meetings of the PCC Steering Committee ended in a virtual stalemate 
and, with the worsening of the situation in Manchuria, it became 
apparent that no real settlement of governmental and constitutional 
questions in China could be reached so long as the Manchurian problem 
remained unsolved. This meant an indefinite postponement of the 
National Assembly, originally scheduled for May 5. Matters were 
further complicated by the continued refusal of the Chinese Commun- 
ist Party to submit a complete list of its military units in accordance 
with the Military Reorganization Agreement of February 25. 

In spite of agreement authorizing the entry of Executive Head- 
quarters field teams into Manchuria, the National Government offered 
obstructions to the functioning of the teams, first by the refusal of the 
Commanding General in Manchuria to permit the teams to enter Man- 
churia and later by the refusal of the National Government members 
of the teams to take any action on the basis that they had no authority. 
It was not until April 8 that the field teams proceeded to areas of 
conflict in Manchuria, where the situation was complicated by develop- 
ments connected with the Russian withdrawal. Subsequent to their 
withdrawal from Mukden, for example, the Russian military authori- 
ties refused to approve the National Government’s use of the rail line 


north toward Changchun for the transportation of Chinese troops, 
alleging that it was prohibited by the terms of the Sino-Soviet Treaty 
of August 1945. It was also reported that the Russian authorities had 
rejected a request by the Chinese Government for the retention of 
small Russian garrisons in the points then being evacuated by Russian 
troops until the National Government’s troops should arrive to take 
over sovereignty at such places. 

Another phase of the Manchurian situation, one which was the sub- 
ject of frequent propaganda attacks by the Chinese Communist Party, 
was the transportation of National Government troops by American 
facilities. On March 31 the Chinese Communists protested the further 
transportation of Chinese Government armies into Manchuria by 
American vessels on the ground that the military reorganization plan 
of February 25 restricted the number of Government troops in Man- 
churia to 5 armies. It was pointed out to General Chou En-lai that 
the limitation of Government troops in Manchuria, set forth in the 
military reorganization plan, was not to be effective until the end of 12 
months and that the movement of National Government armies into 
Manchuria had been authorized by the cessation of hostilities order 
of J anuary 10. 


On April 15, 1946, the day after the withdrawal of Russian troops 
from Changchun, the Chinese Communist forces attacked the city, 
and occupied it on April 18. This action was a flagrant violation of 
the cessation of hostilities order and an act which was to have serious 
consequences. It made the victorious Chinese Communist generals 
in Manchuria overconfident and less amenable to compromise, but 
even more disastrous was the effect upon the National Government. 
It greatly strengthened the hand of the ultra-reactionary groups 
in the Government, which were then in a position to say that the 
Communists had demonstrated that they never intended to carry out 
their agreements. 

At the time of General Marshall’s return to China on April 18, 
the impasse was complete, except that the Chinese Communists were 
willing to submit the future military dispositions and local political 
reorganization to negotiations if the fighting were terminated. The 
National Government declined such compromises, on the grounds that 
the cessation of hostilities order clearly gave National Government 
troops the right to proceed anywhere in Manchuria necessary to estab- 
lish sovereignty, and stated that negotiations regarding political ques- 
tions would be considered only after sovereignty had been established 
along the railway mentioned in the Sino-Soviet Treaty of August 



1945. The Government was militarily powerless, however, to enforce 
such demands. General Marshall submitted a proposal to the Gen- 
eralissimo in keeping with what he believed to be the Generalissimo s 
view that the Government could not and would not advance farther 
north, but discovered that the Generalissimo had in mind the use of 
force to occupy Changchun and overpower the Chinese Communist 
troops in that region. 

At the beginning of May the Generalissimo finally came to the point 
of proposing the same conditions for a settlement of the Manchurian 
problems that the Chinese Communists had actually proposed about 
six weeks earlier, before the Communists had captured Changchun. 
It was also demanded that Chinese Communist forces evacuate Chang- 
chun and permit Government troops to occupy it, indicating that 
following the occupation of Changchun negotiations would begin 
regarding military dispositions and political reorganization. 

The successful Chinese Communist commanders in the Changchun 
region, however, had been strengthened by their acquisition of Jap- 
anese military equipment and stores, including medium artillery 
and tanks, while the National Government’s military position grew 
weaker as its forces advanced, owing to the great distances over 
which its troops had to move in proceeding northward. The 
Chinese Communists therefore did not accept the Government’s 
terms and General Chou En-lai urged General Marshall to with- 
draw shipping support from the National Government armies in 
order to force the hand of the Generalissimo. The Generalis- 
simo’s advisers were urging a policy of force which they were not 
capable of carrying out, even with American logistical support 
and the presence of United States Marines in the North China ports 
of Tsingtao and Tientsin and up the railway line toward the port 
of Chinhuangtao, from which the coal essential for the industries of 
the lower Yangtze Valley area was shipped south. 


In conversations with National Government leaders General Mar- 
shall endeavored to emphasize the seriousness of the situation. He 
pointed out that many of the existing difficulties could have been 
avoided earlier by the National Government but that the situation 
was now reversed ; that there was a complete lack of faith and a feeling 
of distrust on both sides and that each side saw behind all proposals 
from the other an evil motive; that the National Government had 
blocked the sending of field teams into Manchuria which might have 
been able to control the situation; that while the Communists said 
that the cessation of hostilities order of January 10 applied to all of 


China, the National Government resisted its application to Man- 
churia; that when the National Government troops moved into Man- 
churia they attempted to destroy the Chinese Communist forces in the 
hinterland ; and that the Generalissimo’s military advisers had shown 
very poor judgment. He continued that in many instances the Na- 
tional Government authorities had offered opportunities to the Com- 
munist Party to make accusations against their good faith: (1) the 
situation north of Hankow, where Communist troops were surrounded 
by large Government concentrations; (2) the movement of Govern- 
ment troops toward Chihfeng, Jehol Province, under orders issued 
by the National Government military headquarters at Chungking in 
violation of the cease-fire order; (3) the refusal of the Commanding 
General at Canton to recognize the existence of Communist troops in 
that area as well as the orders of the Executive Headquarters and the 
National Government at Chungking regarding Executive Headquar- 
ters’ investigation of the situation in this area; (4) the failure of 
the National Government Army Headquarters to submit daily reports 
of its troop movements south of the Yangtze River, as was clearly 
required by the cessation of hostilities order; (5) the search of homes 
of Chinese Communist Party personnel and closure of Chinese Com- 
munist newspaper offices at Peiping; (6) the “buzzing” of the air- 
field at Yenan by National Government planes; and ( 7 ) the detention 
of Chinese Communist field team personnel at the airfield at Mukden. 
General Marshall characterized these acts as stupid actions of no ben- 
efit to the National Government, which not only served as ammuni- 
tion to the Chinese Communists, but, what was far more serious, stimu- 
lated their suspicion of Government intentions. He said that the 
Kuomintang had had an opportunity to have peace in Manchuria but 
had not utilized the opportunity, and concluded that the Chinese Com- 
munists were now taking advantage of the existing situation and were 
becoming stronger daily, thus placing the National Government in 
a very dangerous military position with over-extended lines and a 
constantly increasing dispersion of forces. 

The reaction of the Chinese Communists was revealed by their desire 
to change the ratio of military strength in Manchuria. General Chou 
En-lai informed General Marshall that the Communist Party wished 
to revise the ratio of 1 Communist division to 14 Government divi- 
sions in Manchuria provided for in the military reorganization agree- 
ment at the end of 18 months, and was adamantly opposed to the 
movement of additional Government troops in Manchuria. General 
Marshall explained that, when the United States had completed the 
movement of the seven National Government armies into Manchuria 
which it was committed to transport to that area, a total of 228,000 



Government troops would have been moved by American facilities. 
However, the total National Government strength at the end of 12 
months authorized for Manchuria in the military reorganization 
agreement would be approximately 240,000 men. 

In further discussions with General Chou En-lai, General Marshall 
stated that in his opinion the fundamental difference between the 
positions of the two sides lay in the question of sovereignty in Man- 
churia; that sovereignty implied control and control could not be held 
by the National Government unless it occupied Changchun; and that 
the Generalissimo had made a significant concession to the Chinese 
Communists by his willingness to hold open for negotiation problems 
relating to the remainder of Manchuria provided the Communist 
forces evacuated Changchun. He further stated that he had done his 
best in an effort to negotiate this critical problem but that the matter 
had virtually passed out of his hands. He added that he did not see 
that he could accomplish anything more through mediation, since at 
that time his position in endeavoring to persuade the Government 
to take various actions had been heavily compromised by the Com- 
munist attack on Changchun. 


At this point General Marshall withdrew from formal mediation 
between the two parties for a settlement of the Manchurian problem. 
He did, however, continue to hold separate conferences with repre- 
sentatives of the two sides and to act as a channel of communication 
between them. The diminishing effectiveness of the Executive Head- 
quarters field teams was a matter of particular concern at this time. 
Executive Headquarters reports during this period revealed the com- 
plete opposition of the Communist members, at the operations level in 
the Headquarters and in the field teams, toward any common sense 
action which should be taken by the teams. United States Army 
officers had originally been impressed by the high degree of coopera- 
tion by the Communists, but the Communist tactics of blocking action 
had lowered American confidence in their sincerity. In view of these 
difficulties the Committee of Three discussed the matter and on May 
14 reached agreement on a document designed to ensure more prompt 
investigation of reported violations of the cessation of hostilities 
order. 12 

During his discussions with National Government leaders, General 
Marshall continued to point out that the time element was of great im- 
portance. The situation in North China was becoming more serious 


See annex 75. 


with two major irritants affecting the situation there — the unsettled 
question of the destruction of railway fortifications and the failure of 
the National Government to report its routine troop movements to the 
Executive Headquarters. The situation, in North China was, of 
course, dominated by the outcome in Manchuria, and continued failure 
to find a solution in Manchuria would probably make the Executive 
Headquarters completely ineffective. A solution was made more dif- 
ficult by the repeated insistence of the Generalissimo in discussions 
with General Marshall that he would not sign or agree to any settle- 
ment that did not provide for evacuation of Changchun by the Com- 
munists and its occupation by the Government and that he would 
accept nothing less than complete National Government sovereignty 
in Manchuria. Under these circumstances General Marshall con- 
sidered it unwise for him to re-enter the negotiations in the capacity 
of mediator, since there was no basis for agreement by the Chinese 
Communist Party and he did not wish to be placed in a position where 
he would have no power to avert an otherwise certain stalemate. 


At the request of the Generalissimo for his views General Mar- 
shall suggested that a compromise solution of the Manchurian issues 
be reached which would provide for Communist withdrawal from 
Changchun and the establishment of an advance echelon of the Execu- 
tive Headquarters at that city as a basis for terminating the fighting 
preliminary to entering into negotiations. This solution would also 
envisage the occupation of Changchun by the Government troops with- 
in a maximum time of six months, preferably much sooner. General 
Marshall’s conclusions as communicated to the Generalissimo, were as 
follows : 

The Government’s military position was weak in Manchuria and 
the Communists had the strategical advantage there. The psycho- 
logical effect of a compromise on the part of the Government to 
achieve peace would not injure its prestige but would indicate that the 
Generalissimo was making every effort to promote peace. The pro- 
posal to utilize the Executive Headquarters in Changchun would bol- 
ster the conviction that the Generalissimo was striving for peace. 
Finally some compromise must be reached as quickly as possible or 
China would be faced with a chaotic situation, militarily, financially 
and economically. 

General Marshall suggested the same general solution on May 13 
to General Chou En-lai, who said that he would transmit the proposal 
to Yenan. General Marshall emphasized that, unless he could be 
reasonably certain of the position of the Communist Party on military 



and political issues, it would be impossible for him to resume the role 
of mediator and that he could not again place himself in the position 
of being a party to an agreement which included provision for 
negotiations regarding vital or fundamental differences unless he had 
reasonable assurance of a favorable outcome. The Chinese Com- 
munist reply to this proposal indicated apprehension that the Govern- 
ment might raise the question of other cities, such as Harbin, once it 
occupied Changchun. The Communists also stated that they desired 
to have five divisions in Manchuria instead of the one division author- 
ized in the military reorganization agreement. 

Daily discussions between the Generalissimo and General Marshall 
were held at this time regarding the detailed terms for a military set- 
tlement, the redistribution of troops as a condition precedent to the 
issuance of a cease-fire order, and tentative arrangements whereby 
the Communists would voluntarily evacuate Changchun and an ad- 
vance section of the Executive Headquarters would assume control 
of the city, pending a further settlement of problems relating to 
Changchun and the areas north of that city. On May 22 the 
Generalissimo informed General Marshall that he had not heard from 
his military commanders in Manchuria for three days and that he 
feared that following their capture of Ssupingchieh on May 19 (after 
fighting lasting over a month) they were advancing toward Chang- 
chun. The Generalissimo expressed agreement with General Mar- 
shall’s view that occupation of Changchun at a time when the basis 
of an agreement with the Communists was practically completed 
would be inadvisable and said that he was leaving for Mukden on 
May 24 in order to keep control of the situation. General Marshall 
pointed out the danger of a delay and expressed the hope that the 
Generalissimo would return as soon as possible in order that the 
negotiations could be carried to completion. Generalissimo Chiang 
Kai-shek departed for Mukden on May 23, his departure on this 
11-day trip being the first of a chain of events which were almost 
completely disastrous in their effect on the situation. The fact that 
the Generalissimo requested and received the use of General Mar- 
shall’s official airplane for the trip served to heighten the public im- 
pression of General Marshall’s close connection with the trip and to 
add to the embarrassment that later developed. 

On May 23 General Marshall conveyed to General Chou En-lai three 
points set forth by the Generalissimo prior to his departure as con- 
ditions precedent to any general agreement: (1) The Chinese Com- 
munist Party must make every effort to facilitate the restoration of 
communications; (2) in any agreement regarding Manchurian issues, 
provision must be made for carrrying out the military demobilization 


and reorganization plan within specified dates; and (3) the Generalis- 
simo would not commit himself to further agreements without tin 
understanding that when field teams or high staff groups reached an 
impasse, the final decision would be left to the American member. 
General Marshall also asked General Chou En-lai whether the Com- 
munist Party would agree to the proposal for the evacuation of 
Changchun by the Communist troops, the entry into Changchun of the 
advance section of the Executive Headquarters, and the cessation of 
further advances of Government troops. 

General Chou En-lai stated that the Communist Party would agree 
to the three proposals suggested by General Marshall but that the 
Generalissimo’s three conditions were new. He added that he would 
endeavor to solve the communications problem with the National 
Government representative and that he had no objection to the second 
condition. With respect to authority for decision by American mem- 
bers, he said that this would have to be discussed with his associates. 


On May 23 the National Government’s forces entered Changchun, 
following a Communist withdrawal from that city and little or no 
opposition from the Communist forces after the Government capture 
of Ssupingchieh on May 19. The absence of the Generalissimo from 
Nanking and the difficulty of communication with him by General 
Marshall made for an extremely unsatisfactory situation at a most 
critical moment. The Generalissimo’s presence in Mukden at the 
time of the capture of Changchun conveyed the impression of a 
journey timed to coincide with a previously planned military triumph, 
and public pronouncements by the Generalissimo in Mukden tended 
to heighten this impression. In spite of General Marshall’s appeals 
by radio for the issuance of an order for the cessation of offensive 
operations, the Generalissimo took no action toward that end, although 
his earlier insistence had been on the evacuation of Changchun and its 
occupation by Government forces as a precedent to further negotiation 
and the issuance of a cease-fire order. To make matters more serious, 
the Government troops, after their occupation of Changchun, con- 
tinued to advance north along the rail line toward Harbin and toward 
Kirin to the east, and the result was to increase Communist suspicion 
and distrust of Government promises and to place General Marshall’s 
impartial position as a possible mediator in a questionable light insofar 
as the Communists were concerned. The positions were now reversed. 
Where formerly difficulties arose from the Communist attack on 
Changchun in open violation of the cease-fire order and the consequent 
stronger stand taken by the Chinese Communist generals in Man- 



cliuria, the new situation played directly into the hands of the National 
Government military commanders in Manchuria, who now felt certain 
that they could settle the problem by force and were therefore disin- 
clined to compromise with the Communists. 


On May 24 the Generalissimo forwarded to General Marshall from 
Mukden his formal conditions for the restoration of peace. He 
demanded the execution of the cessation of hostilities agreement of 
January 10, which specifically related to freedom of action for the 
Nanking Government in taking over sovereignty in Manchuria, and 
of the agreement for military reorganization of February 25. The 
Generalissimo placed first importance on a Communist demonstration 
of good faith by permitting National Government agencies to restore 
communications in North China and stipulated again that in the Exec- 
utive Headquarters and its field teams American members should cast 
the deciding vote. He also asked General Marshall whether he would 
guarantee Communist good faith in carrying out agreements. No 
mention was made by the Generalissimo of his intention or willingness 
to issue an order halting troop movements or to agree to the establish- 
ment of an advance section of the Executive Headquarters at Chang- 
chun, both of which had been proposed by General Marshall at the 
time of the Generalissimo’s departure for Mukden with the suggestion 
that the Generalissimo might reach a decision while in Mukden and 
inform General Marshall. 

General Marshall, therefore, dispatched a message to the General- 
issimo at Mukden requesting explanatory details regarding his general 
statements, proposing the immediate movement of a section of the 
Executive Headquarters to Changchun and urging him to issue an 
order immediately directing the cessation of attacks, pursuits, or 
advances while the details of a truce were being arranged. General 
Marshall urged him to avoid the painful results of previous mistakes 
in forging ahead in Manchuria without granting permission for the 
presence of field teams to prevent unnecessary skirmishing and the 
more recent unfortunate results of the attitude of the belligerent 
Chinese Communist commanders at Changchun. General Marshall 
also asked for an explanation of the meaning of the Generalissimo’s 
use of the word “guarantee” in reference to General Marshall’s role. 

On May 28 the Generalissimo again communicated with General 
Marshall, repeating the terms previously set forth but agreeing to a 
qualification General Marshall had suggested regarding the power of 
decision of Americans in the Executive Headquarters and its field 
teams. The Generalissimo also stated that, with respect to the 


method of recovering sovereignty in Manchuria, the National Govern- 
ment could not abandon the taking over of administration in any area, 
but might agree to send forward, after military advances had ceased, 
only administrative officials and such military and police forces as 
would be absolutely necessary for the maintenance of local order and 
communications. He explained that, by use of the word “guarantee,” 
he meant that General Marshall would set time limits for putting into 
effect all agreements which General Marshall had signed and would 
assume the responsibility of supervision over the strict observance of 
such agreements on the part of the Chinese Communists. 

Not having received this second message from the Generalissimo, on 
May 29 General Marshall sent a further message to the Generalissimo 
at Mukden, informing him that the continued advances of the National 
Government troops in Manchuria in the absence of any action to ter- 
minate the fighting, other than the terms indicated by him in his first 
message from Mukden, was making General Marshall’s services as a 
possible mediator extremely difficult and might soon make them virtu- 
ally impossible. No reply having been received to this message, 13 Gen- 
eral Marshall dispatched an additional message to the Generalissimo on 
May 31 at Peiping, where the latter had just arrived, repeating the 
substance of his previous message and stating that a point was being 
reached where the integrity of his position was open to serious ques- 
tion. General Marshall again requested the Generalissimo, therefore, 
to issue immediately an order terminating advances, attacks or pur- 
suits by the National Government troops and to authorize the im- 
mediate departure of an advance section of the Executive Head- 
quarters to Changchun. 

In a message of June 1 from Peiping the Generalissimo informed 
General Marshall that in all decisions he had kept in mind the diffi- 
culty of General Marshall’s position and was doing everything in his 
power to facilitate and assure the success of his work. He said that 
he was prepared to agree to the proposal to send an advance section 
of the Executive Headquarters to Changchun in the event of his not 
being able immediately to issue orders to National Government troops 
to terminate their advance. 

During this period General Marshall continued to have conferences 
with General Chou En-lai, National Government leaders, and repre- 
sentatives of the minority parties. These representatives had offered 
certain proposals for settlement of the Manchurian problem, but they 
were not approved by either the National Government or the Chinese 
Communist Party. 

13 It later developed that General Marshall’s message of May 29 had missed 
the 'Generalissimo in Mukden and was long delayed in delivery. 



On June 3 the Generalissimo returned to Nanking. A discussion 
of the situation with General Marshall indicated that a misunder- 
standing on the part of the Generalissimo caused by mistranslation of 
General Marshall’s message had prevented the immediate establish- 
ment of an advance section of the Executive Headquarters in Chang- 
chun. General Marshall, therefore, immediately directed its estab- 
lishment. The Generalissimo agreed to issue an order to his armies 
in Manchuria to cease advances, attacks or pursuits — in other words, 
aggressive action — for a period of ten days to afford the Communists 
an opportunity to prove their sincerity by completing negotiations 
with the National Government during that period on the following 
points: (1) detailed arrangements to govern a complete termination 
of hostilities in Manchuria; (2) definite detailed arrangements, with 
time limits, for the complete resumption of communications in North 
China; and (3) a basis for carrying out without further delay the 
agreement for military reorganization of February 25. 

The Generalissimo first stipulated one week in which to complete 
these negotiations but finally agreed to a period of 10 days. He in- 
formed General Marshall that this would be his final effort at doing 
business with the Communists, that the present indeterminate situa- 
tion with communications blocked, coal barely obtainable in sufficient 
quantities, and cities starving, could not be endured economically or 
otherwise, and that all-out war would be preferable. 

When the Generalissimo’s terms were presented to General Chou 
En-lai by General Marshall, General Chou immediately asked for an 
extension of the 10 days to one month but finally reduced his request 
to 15 days on the ground that there were many complicated plans to 
be agreed to and General Chou would have to fly to Yenan at least 
once for conferences with Chinese Communist leaders. 

On June 6 the Generalissimo and the Chinese Communist Party 
issued separate announcements of orders halting advances, attacks, or 
pursuits by their troops in Manchuria for a 15-day period beginning 
at noon on June 7. 13a They also announced that during this period 
agreements were to be reached regarding arrangements for the com- 
plete termination of hostilities in Manchuria, complete resumption .of 
communications in China, and execution without delay of the agree- 
ment for military reorganization of February 25. 

Constant negotiations followed the promulgation of these orders. 
General Chou En-lai consulted the Communist leaders in Yenan and 
returned to Nanking for discussions. An agreement for the resump- 

131 See annex 76. 


tion of communications was reached after detailed discussions. 14 
Little trouble was anticipated in reaching agreement on the detailed 
arrangements for formal termination of hostilities in Manchuria. The 
great difficulties to be resolved related to demobilization, reorganiza- 
tion, and particularly redistribution of troops, especially in Man- 
churia and Shantung Province. General Marshall’s problems during 
this period also related to sporadic but violent fighting in various 
localities, mostly in North China, which could not be halted on short 
notice, since many of the actions had evidently been planned and 
ordered a week or more in advance. 

The rather virulent Communist propaganda attacks against the 
United States and the alleged support by General Marshall of the 
National Government in the fighting at this time were due to a con- 
tinuation of an effort (1) to arouse American opposition to any mili- 
tary representation in China and (2) to offset in the United States 
the effect of the Generalissimo’s proposal to give American officers 
the deciding vote in case of disagreements. The fact that just as 
an agreement seemed to be on the verge of being reached the Generalis- 
simo remained absent in Mukden and Peiping for a considerable period 
while his armies exploited their successful action south of Changchun 
aroused great suspicion against his good faith and particularly 
against the impartiality of General Marshall’s attitude, since General 
Marshall had advanced proposals to the Chinese Communists for 
Communist evacuation of Changchun and the cessation of further 
advances by National Government troops which the Communists had 


Negotiations during the truce period proceeded very slowly, due to 
the reluctance of either side to commit itself in advance of the other 
regarding reorganization and particularly redistribution of troops. 
Fighting in Shantung Province, arising from a Communist offensive 
at the beginning of the truce period and lasting for about a week, 
proved to be a very disturbing factor, causing increased bitterness and 
unwillingness to make concessions. 

Several members of the PCC asked General Marshall to suggest the 
convening of the PCC Steering Committee at this time to work 
simultaneously on political problems while the Committee of Three 
handled the military problems. General Marshall informed them 
that this did not come within the scope of his authority. The General- 
issimo had often said that he would not negotiate on political problems 

14 See annex 77. 



until he had occupied Manchuria. He had, however, later said that 
after Government occupation of Changchun he would be prepared to 
negotiate both political and military questions. General Chou En-lai 
indicated that it would be preferable to omit discussion of political 
matters and to preserve the status quo in the various areas. He pointed 
out to General Marshall that, although the latter had been reluctant to 
accept the Generalissimo’s proposal that the Committee of Three be 
empowered to solve administrative problems, he felt that this matter 
should be given further consideration. He added that, since General 
Marshall did not wish to be involved in political decisions, the problem 
could be solved by action to be taken by the reorganized Government. 

On June 17 the Generalissimo indicated to General Marshall, for 
transmission to General Chou En-lai, the nature of his demands. The 
National Government proposals required the evacuation of Chinese 
Communist forces from Jehol and Chahar Provinces before September 
1, 1946 ; the occupation by Government forces of Chefoo and Weihai- 
wai in Shantung Province; the reinforcement of Tsingtao with one 
National Government army to permit the withdrawal of the United 
States Marines stationed at that city ; the evacuation by the Chinese 
Communists before July 1, 1946, of all localities in Shantung Province 
forcibly occupied by Communist troops after noon of June 7, 1946; 
the immediate occupation of these localities by Government garrisons ; 
and the reinforcement of the Tientsin region by one Government army, 
commencing September 1, 1946, to permit the withdrawal of the 
United States Marine forces in that area. With respect to Manchuria, 
the National Government proposals provided for Government occupa- 
tion of various points then held by Communist forces, such as Harbin, 
Antung, Tunghwa, Mutankiang, and Paicheng. 

General Chou En-lai, after preliminary study of these proposals, in- 
formed General Marshall that they were entirely too demanding to 
admit of acceptance by the Chinese Communist Party. He stated 
that, except for the restoration of the status quo in Shantung Province 
prior to June 7, none of the points could be considered, and pointed 
out that the date of June 7 should be applied to Manchuria only, in 
accordance with the orders issued by both sides halting advances, 
attacks or pursuits by their troops in Manchuria, beginning on that 
date, while the restoration of original positions in China proper should 
be based on January 13, in accordance with the cessation of hostilities 
order of January 10. General Marshall also discussed the situation 
with the Generalissimo and told him that there seemed to be no 
likelihood that the Chinese Communists would accept his terms without 
considerable modification. General Marshall had suggested to General 
Chou En-lai that he fly to Yenan to consult with the leaders of his 


party, but after General Chou held a conference with Nationalist 
Government officials he stated that nothing had occurred in this 
conference to justify a trip to Yenan. 

The principal stumbling block presented by the National Govern- 
ment proposals did not appear to be in regard to readjustments in 
Manchuria. Communist resentment was more aroused by the Na- 
tional Government stipulations regarding North China, which re- 
quired Communist evacuation of provinces and cities then under their 
occupation and subsequent entry of Government troops into these 

The negotiations had again reached an impasse, and there remained 
only a few days before the truce period would expire. The situation 
was extremely critical and had not been helped throughout by the 
belief, freely expressed by some of the National Government military 
officers and politicians, that only a policy of force would satisfy the 
situation and that the Chinese Communists could be quickly crushed. 
General Marshall considered the latter view a gross underestimate of 
the possibilities, as a long and terrible conflict would be unavoidable, 
and conveyed his views to the Generalissimo on this subject. 

At the suggestion of General Marshall, the Generalissimo agreed 
to extend the truce period until noon of June 30 for the purpose of 
permitting further time to negotiate matters referred to in his original 
15-day truce order. At the same time the Generalissimo presented two 
additional terms: (1) The Communists were to withdraw from the 
Tsinan-Tsingtao Railway before August 1, 1946, and (2) the pro- 
cedure of unanimous vote in the Committee of Three and the Ex- 
ecutive Headquarters was to be revised before June 30, 1946. 

Negotiations during the extended truce period proceeded in formal 
meetings of the Committee of Three with some prospect of success. 
These meetings marked the formal re-entry of General Marshall into 
the negotiations as mediator. The Chinese Communists made conces- 
sions in granting the deciding vote to Americans on teams and in 
Executive Headquarters regarding matters pertaining to cessation of 
hostilities procedures, interpretation of agreements, and their execu- 
tion. This did not apply, however, to the Committee of Three, since 
General Marshall thought that the United States Government should 
not bear the heavy responsibility through his actions in regard to mat- 
ters of great importance beyond the interpretation of agreements. 

It was difficult to predict the rate of progress and eventual outcome 
because of the effect of heavy sporadic fighting, the carelessly expressed 
desire of some important Government leaders to settle issues by force, 
unfortunate propaganda, and mutual suspicion and distrust 



On June 24, the Committee of Three reached agreement on a docu- 
ment entitled “Stipulations for the Resolution of Certain Disagree- 
ments among the Field and Communication Teams, and Executive 
Headquarters in Changchun and Peiping.’ 5 15 Under this agreement 
certain authority was granted to American officers on teams and at the 
Executive Headquarters which was expected to facilitate greatly con- 
trol of the situation in areas of hostilities in the future. The most 
difficult problem was that of redisposition and reduction of troops 
in Manchuria and North and Central China. The Manchurian phase 
then seemed to be the least difficult to compose. 


By June 26 an agreement had been reached in the Committee of 
Three for the cessation of hostilities in Manchuria, entitled “Direc- 
tive for the Termination of Hostilities in Manchuria.” 16 This Di- 
rective provided for the application to Manchuria of the cessation of 
hostilities agreement of January 10, except as modified in the Directive 
or later by the Committee of Three; for the separation from contact 
of troops in close or hostile contact; for the readjustment of troops 
on the basis of the situation believed to have existed at noon of June 
7, 1946; for the cessation of all tactical movements; for the punish- 
ment of commanders who failed to carry out the terms of the Directive ; 
and for the submission by both sides to the Advance Section of the 
Executive Headquarters, within 15 days of the effective date of the 
Directive, of lists of all units, strengths and locations in Manchuria. 

Agreement on this document marked the settlement of the second 
of the three major issues to be decided during the 15-day truce period, 
which had now been extended to June 30. It was understood, how- 
ever, that agreements on individual issues would not be operative unless 
agreement on all major issues was reached in accordance with a stipu- 
lation to that effect by the Generalissimo. 


When the discussions revealed the impossibility of reaching agree- 
ment for revision of the basic military reorganization agreement of 
February 25 prior to the expiration of the extended truce period, nego- 
tiations were centered on a preliminary agreement covering only the 
principal issues, with the understanding that formal revision would 
be negotiated after the completion of the preliminary document. 

“ See annex 78. 

18 See annex 79. 



The question of troop dispositions was complicated by the fact that 
little demobilization had taken place in North China. The National 
Government had confined its demobilization to South and West China 
and further demobilization would be largely confined to North China 
and Manchuria. This National Government demobilization had been 
carried out by reducing divisions which lacked full strength to 
brigades, the officer personnel of divisions headquarters and head- 
quarters troops having been demobilized. The real point was that 
under the present Government proposals very heavy troop demobili- 
zation on both sides would be involved between July 1, 1946, and 
January 1, 1947. 

On June 21, General Chou En-lai had stated that the Chinese 
Communist Party proposed that: (1) the Committee of Three should 
immediately stop the fighting in Manchuria and China proper and a 
new order for the termination of hostilities should be issued with the 
additional stipulation that American members of field teams should 
have the power to execute this order and to decide upon investigations 
to be made by the teams; (2) after the cessation of fighting, the 
Committee of Three should work out a plan for the restoration of 
communications and the Chinese Communists pledged that the repair 
of railways would have first priority; (3) after the cessation of hos- 
tilities, the Committee should work out arrangements for the re- 
organization and demobilization of armies in all China, including 
Manchuria, and the staffs of both parties under the leadership of the 
American staff should work out a plan for the Committee of Three’s 
approval; and (4) a second session of the Committee of Three should 
be convened to discuss the reorganization of the Government, the 
protection of the people’s rights and a solution of the people’s liveli- 
hood, and local governments should be reorganized and elections held. 
General Chou expressed the belief that the Generalissimo was most 
concerned over the problems of army reorganization, integration, and 
training and pointed out that the Generalissimo presented demands in 
connection with these problems which caused concern to the Chinese 
Communist Party because if the Chinese Communist Party accepted 
these demands there would still be no assurances on the many other 
problems which had not been discussed. General Chou considered 
this the crucial point at issue. He suggested, therefore, that during 
the period of army reorganization the Communist troops be reor- 
ganized in Communist areas and Government troops in Government 
territory and that training be carried out by American officers, who, 
he said, were trusted by both sides, the two forces to be brought 
together and integrated after this interim period. 



General Marshall pointed out to General Chou that the Generalis- 
simo had stated very clearly, in his announcement of the truce 
period on June 6, that a basis should be established for carrying 
out without further delay the agreement of February 25 for the 
demobilization, reorganization and integration of Chinese armies 
and that the Generalissimo had this in mind when he presented his 
proposals. General Marshall emphasized that there must be a definite 
understanding of Chinese Communist demands regarding the re- 
distribution of troops in North China and that this should have been 
decided upon in March and April, when the Chinese Communists 
were to have submitted a list of their troops for demobilization. He 
continued that the National Government had submitted such lists 
but the Communist Party had not done so. In the absence of these 
lists, the staffs had been unable to draw up a plan for troop redistribu- 
tion in North China. 

After learning of the decision of the Generalissimo to extend the 
truce period, General Chou En-lai agreed to include the questions 
of redistribution of troops in North and Central China in the agenda 
for discussion since this problem was the greatest gap between the 
two parties. In conversations on this subject, General Marshall 
pointed out that when General Chou referred to the attitude of 
Government military commanders in Manchuria, he should remember 
General Marshall’s statements about the Chinese Communist generals 
in Manchuria at the time of their occupation of Changchun, and 
that he should also remember that he himself had frequently used 
the expression “conditions have changed” in justifying some pro- 
posal, just as this expression was now being used by the National 
Government in presenting its new stipulations. 

On June 26 General Marshall informed General Chou that the 
Government, pursuant to the Communist Party demand, was willing 
to agree to a revision of troop strengths in Manchuria to allow the 
Communists to have 3 divisions as against the Government’s 15 divi- 
sions but would not agree to 5 Communist divisions. 

General Chou said that the Chinese Communist Party’s difficulty 
was that, while it was entering into agreements on military matters, 
it did not know what the Government attitude would be later in re- 
gard to political questions. He then explained the views of the 
Chinese Communist Party as follows : 

Army units would have no connection with civil administration, 
and after the reorganization of the Central Government and local 
governments the Communist armies would be assembled in areas under 
Communist control and Government armies in areas under its control. 
The army would be separated from civil administration through the 


establishment of local self-government and elections. The Govern- 
ment view that political administration should be adjusted accord- 
ing to the identity of the troops in control of a particular area was a 
violation of the principle of subordination of the army to civil ad- 
ministration. Under the Government proposals, Government troops 
would in many cases move into Communist areas and change the 
civil administrations. The movement of Government armies into 
Communist-held areas for the purpose of demobilization would mean 
occupation of Communist territory through negotiation as a substitute 
for occupation by force. This procedure was incompatible with the 
PCC resolutions on this subject and with the general agreements. The 
Communists were willing to withdraw from some areas in order to 
erase Government fear of a Communist threat, but such areas should 
be left ungarrisoned. Both Jehol and Shantung Provinces were 
largely under Communist control and it was more logical to expect 
the Government to evacuate these provinces than to demand that the 
Communists do so. 

On June 27 the Generalissimo told General Marshall that political 
adjustments were at this time difficult, if not impossible, unless mili- 
tary readjustments were effected as a means of avoiding clashes, and 
presented specific proposals for such readjustments: The Chinese 
Communist Party should, within ten days, evacuate north Kiangsu 
Province, the Tsinan-Tsingtao Bailway, Chengte and Kupeikou, An- 
tung Province, and Harbin, these places to be occupied by Government 
troops within one month; the Communists should withdraw in one 
month from other places to be evacuated, but the entry of Government 
troops might be delayed for two or three months ; and as a compromise 
measure, Communist officials in Hsin Heilungchiang, Hsingan, and 
Nenchiang Provinces in Manchuria, and Chahar Province, might be 
accepted by the Government as a temporary arrangement which would 
receive consideration at the time of political reorganization. 

In commenting upon the Generalissimo’s terms, General Chou En-lai 
expressed the following views: Garrison troops must not interfere 
with the local administration in areas where they were stationed. 
While the Chinese Communist Party was willing to consider a read- 
justment regarding Harbin and the detailed problems involved in 
stationing Government and Communist troops in specified areas, it 
was not in a position to accept the Government claim to the Tsinan- 
Tsingtao Railway, Chengte, Kupeikou, and the other places. How- 
ever, if the Government felt that the Communist forces along the rail 
line in north Kiangsu and Shantung constituted a menace to the Gov- 
ernment, the Communists were willing to reduce their forces in such 
areas or withdraw them altogether, but the Government troops should 



not enter Communist areas. The Communists were willing to garrison 
north Kiangsu with a small force by reducing the number of troops 
provided for in the military reorganization agreement of February 25. 
They would withdraw their forces from the Tsinan-Tsingtao Railway 
if the Government would agree to garrison only Tsinan, Weihsien, and 
Tsingtao. All Communist troops would be withdrawn from the 
Tsaochuang coal mines, leaving no garrison troops and freeing the 
railway line for operation in connection with the coal mines, the latter 
to be controlled by a committee established for that purpose. These 
withdrawals should, however, in no way prejudice the local admin- 
istrations established by the Communists in those areas. 

Subsequent conversations on the subject of troop dispositions indi- 
cated that the Government was adamant regarding its demand for the 
withdrawal of Communist forces from Chengte and for the stationing 
at Yenki of the Communist forces in eastern Manchuria and was 
insistent on having sizable Government garrison troops in Harbin. 
The Communist Party was equally adamant that areas to be evacuated 
by the Communists during the period of army reorganization should 
not be occupied by Government forces. 


After these discussions General Marshall drew up a draft pro- 
posal entitled “Preliminary Agreement to Govern the Amendment 
and Execution of the Army Reorganization Plan of February 25, 
1946” 17 as a basis of discussion by the two Chinese sides with the 
hope that agreement might be reached on this final document prior 
to the expiration of the extended truce period on noon of June 30. As 
stated in the document, it established conditions for the purpose of 
committing the National Government and the Chinese Communist 
Party to certain understandings in order to facilitate the preparation 
and acceptance of the formal documents required and to permit the 
immediate issuance of instructions for the final termination of hos- 

The chief points of this document were : 

1. Provision for the specific disposition of Government and Commu- 
nist troops, by definite localities, in Manchuria and China proper. 

2. No change in 5-to-l ratio of troop strengths. 

3. The previously established period of 12 months for the assign- 
ment of troops to specified localities to be altered to 6 months. 

4. The Executive Headquarters to determine immediately localities 
occupied by Government and Communist forces in China proper since 

17 See annex 80. 


January 13, 1946, and troops involved to evacuate such areas within 
20 days, unless specifically directed otherwise. 

5. The Executive Headquarters to determine immediate localities 
occupied by Government and Communist forces in Manchuria after 
noon of June 7, 1946, and troops involved to evacuate such areas 
within 10 days unless specifically directed otherwise. 

6. The Communist Party to agree to a Government garrison in 
Harbin of 5,000 men. 

7. The Communist Party to concentrate its troops in specified lo- 
calities, Government troops not to move into areas vacated in China 
proper and existing local governments and Peace Preservation Corps 
for maintenance of local security to be continued. 

An annex to this document specified areas in which Communist 
troops were not to be garrisoned or concentrated, leaving for discussion 
the time period within which these troops were to be withdrawn. 

In commenting on this draft proposal, the Generalissimo expressed 
unwillingness to confine paragraph 5 to Manchuria only. Regarding 
paragraph 6, which dealt with the status of Harbin, he agreed to 
appoint a civilian mayor and to name a person acceptable to the 
Communist Party. In regard to paragraph 7 he first expressed 
complete disapproval and his final attitude was not clearly indicated. 
He agreed to Communist local governments, but could not accept 
such an arrangement in Kiangsu Province because of the numerous 
refugees, who, he said, would be mistreated by the existing local 
governments. He accepted the idea of Peace Preservation Corps on 
the basis of strengths similar to those of local security troops in a 
hsien. The Generalissimo would not accept partial occupation by 
the Government of north Kiangsu but insisted that the Communist 
evacuation should be carried out as far north as Huaian within 6 
weeks and, within 3 to 6 months, north of the Lunghai Railway. He 
also stipulated that the Communist evacuation of the Tsinan-Tsingtao 
Railway should include the coal mines along that line, particularly 
Poshan (on a spur running south from Changtien) . He was unbending 
in regard to the Communist evacuation of Chengte and said that the 
Communists should evacuate areas in Jehol Province south of the 
latitude of Chengte within 1 month and the city itself within 3 months. 
He stipulated that Antung Province should be evacuated within 1 
month and concluded that a paragraph should be added to the document 
requiring the completion of amendments to the military reorganization 
of February 25 within 10 days. In regard to the Manchuria Annex, 18 
which had been presented to General Chou En-lai on June 17 with 
National Government approval as an annex to the amendment of the 

18 See annex 81. 



agreement of February 25, the Generalissimo stated that the entire 
demobilization and integration program in Manchuria should be 
completed before November 1, 1946, the original document having 
provided for its completion by January 1, 1947. 

On June 29 General Chou En-lai commented as follows to General 
Marshall on this document and the reservations of the Generalissimo 
to the document: The Chinese Communist Party could not agree to 
the Generalissimo’s desire to make an exception of north Kiangsu, 
although it would be willing to station only minimum forces in that 
area. Nor was the Communist Party in a position to accept the time 
limits desired by the Generalissimo because it was not sufficiently 
informed of actual conditions to know how much time would be 
required to effect the concentration of Communist troops in the areas 
indicated. He suggested, therefore, a period of 1 to 3 months — in 
some cases it would require the minimum and in others more. 

As Shantung Province was almost entirely under Communist occu- 
pation, the Communists should have some cities on the Tientsin- 
Pukow line if they withdrew entirely from the Tsinan-Tsingtao Rail- 
way. Although the Communists had no intention of stationing troops 
at the coal mines along the Tsinan-Tsingtao Railway, the stipulation 
that they should give up all these coal mines was not acceptable in 
principle. Further concessions regarding Chengte were impossible. 
The Communists had made many concessions to the Government 
without presenting any demands, except the proposal for an increase 
of a few divisions in Manchuria, and he was asking Yenan for author- 
ization to withdraw that proposal. Since he had previously thought 
that the National Government’s demand regarding Antung referred 
to the city rather than the Province, he would have to refer this ques- 
tion to his colleagues in Manchuria before giving a reply. 

After further discussion, General Chou said that he was prepared to 
consider any formula except that for civil administration involving 
the withdrawal of the Communist forces from north Kiangsu and 
Government occupation of that region. He continued that the main 
text of the document was almost entirely acceptable to the Communist 
Party except for one or two minor points. 

Thus the only important issue on which agreement had not been 
reached at this time was the question of the status of the local govern- 
ments in the areas from which the Chinese Communist forces would be 
withdrawn. The settlement of this issue would virtually have assured 
an agreement on the preliminary document for the amendment of the 
military reorganization plan, which, in turn, would have led to the 
signing of all the documents discussed during the June truce periods, 


the Generalissimo having stipulated that all the documents on which 
agreement should be reached be signed simultaneously. 

On the following day the Generalissimo indicated that he was will- 
ing to compromise somewhat in the matter of Chengte but insisted that 
the evacuation of Kiangsu by the Communists to the north of the 
Lunghai Railway be completed within one month. General Marshall 
pointed out that it would be impossible logistically to evacuate to the 
north of the Lunghai line in one month and that the most serious 
factor was the Communist insistence on the continuation of the local 
administrations and a Peace Preservation Corps. He then suggested 
that a compromise solution be found on the basis of the continuation 
of the local governments, including the establishment of some specially 
selected group to arrange an agreement regarding a modification of 
these governments and the matter of the Peace Preservation Corps. 

General Marshall pointed out to the Generalissimo that statements 
issued by his military leaders indicated that the Government was 
washing its hands of any democratic procedure and was pursuing a 
dictatorial policy of military force. He further informed the Gen- 
eralissimo that comparison of the army dictatorship in J apan, which 
led to the destruction of that nation, with the present procedure of the 
Chinese military leaders would be inevitable. General Marshall in- 
formed the Generalissimo that in his opinion an extension of the exist- 
ing form of partial truce would probably result in violent military 
ruptures due to the tense and explosive situation, the bitterness of the 
commanders in the field, and the strong desire of Government military 
leaders to settle matters by force, for which the National Government 
plans were complete and fairly well known to the Communist Party. 

The Generalissimo finally announced that he had already issued 
instructions continuing in effect his orders against aggressive action 
by his troops. On J une 30, the Kuomintang Minister of Information 
publicly announced that, while the truce period had expired at noon 
on J une 30 and although no satisfactory agreement had been reached 
between the two parties, the Government had requested General 
Marshall to continue mediation with a view to reaching a peaceful 
settlement and that the Government would not initiate any attacks 
against Communist forces but would order its troops to remain on 
the defensive and await the settlement of pending issues. 

On July 1 an announcement was made that the Generalissimo 
had issued orders continuing the prohibition against aggressive action 
by his armies. 19 General Chou En-lai subsequently furnished Gen- 

19 See annex 82. 



eral Marshall a copy of a similar order issued on July 1 by the Chinese 
Communist Party leaders. 20 


The situation was further complicated by the renewed public ex- 
pression by several National Government leaders of a desire to settle 
the issue by force and by mass meetings in Shanghai carefully organ- 
ized to stir up anti-American feeling, related in particular to the 
then current Congressional consideration of lend-lease matters. 

The Chinese Communists professed to regard measures for aid to 
China and official statements in Washington as proving their con- 
tention that American economic and military support to the Chinese 
Government would continue to be given irrespective of whether the 
National Government offered the Communists a fair and reasonable 
basis for settlement of military and political differences. The Com- 
munists maintained that new legislation intended to aid China which 
was then under consideration in the United States Congress 21 was 
reinforcing the National Government’s tendency to deal with the 
Communists by force and was thus contributing to all-out civil war. 
At the same time some reactionary Kuomintang elements in inner 
Government circles were utilizing American measures as a basis for 
pressing the Generalissimo to push forward with a campaign of 
extermination against the Communists. Yet these and other Kuomin- 
tang extremists appeared to be joining in anti-American agitation 
on the grounds that American economic pressure was causing Ameri- 
can imports to displace Chinese products, bankrupt Chinese indus- 
trialists and prevent Chinese recovery. These Kuomintang groups 
were also antagonistic to the restraint exercised by General Marshall 
and his assistants on the National Government with regard to an 
anti-Communist military campaign and were even using the Com- 
munist line against American intervention in pursuance of their aim 
to free the National Government from any American impediment to 
drastic anti-Communist action. The agitation and propaganda re- 
sulting from the activity of the different factions was being mani- 
fested in mass demonstrations, press campaigns and mob actions. 
One such incident involved a Shanghai peace delegation, consisting 
of educators, businessmen, students, and labor representatives and 
including therein representatives of women’s organizations, which 

20 See annex 83. 

21 Under his wartime powers, the President had directed the establishment of 
a small military advisory group in China. The proposed legislation would have 
provided legislative authority for such a group and the military assistance 
under the new legislation would have been carried out in accordance with the 
military reorganization agreement of Feb. 25, 1946. See chapter VII. 


proceeded to Nanking on June 24 for the publicly stated purpose of 
petitioning the Government to avoid civil war. This peace delega- 
tion was met at the railway station and restrained from leaving by 
an organized group of Kuomintang secret police, who confined the 
delegates in a room and in the course of a disturbance lasting several 
hours mauled and beat the delegates so severely that they were 
hospitalized. Government gendarmes who were present at the be- 
ginning of the incident failed to intervene and soon disappeared 
and the delegates were not rescued until several hours later. 

During July there began a gradual worsening of the military situa- 
tion with the spread of hostilities to various points in China proper. 22 
The Commissioners of the Executive Headquarters had endeavored 
to keep the situation under control by dispatching a message on July 
5 to all field teams and to the advance section at Changchun, in which 
it was stated that the National Government and the Chinese Commu- 
nist Party had announced that the truce was to be continued through- 
out China pending the outcome of further negotiations. The Com- 
missioners directed all commanders to refrain from aggressive action, 
including advances, attacks, and pursuits. The effect of this order 
was short-lived, however, and other events occurred which gave indi- 
cation of further deterioration in the situation, both militarily and 

On July 7 the Chinese Communist Party issued a manifesto con- 
taining a bitter attack on American policy toward China and a protest 
against what the Communists termed American military and financial 
aid to the National Government, which encouraged the civil- war 
policy of the Kuomintang. General Marshall had previously re- 
frained from comment on such propaganda attacks, but the coincidence 
of events led him to inform General Chou En-lai of the serious blow to 
the negotiations such propaganda attacks represented, paralleling as 
they did similar propaganda releases from Moscow, and of the im- 
possibility of his serving any useful purpose in mediation and in the 
termination of hostilities while such attacks continued. 

Matters were not helped at this stage by the departure of the Gen- 
eralissimo from Nanking for Kuling on July 14, which meant that 
negotiations would be greatly handicapped during his absence. There 
were increasing signs of the gravity of the situation from a military 
standpoint, as hostilities spread in various areas. Each side accused 
the other of responsibility for offensive action and movements of 
troops. Accompanying the deterioration in the military situation 

23 Meetings were held in early July of a special group of National Government 
and Chinese Communist representatives to discuss the problem of local govern- 
ment but no agreement could be reached. 



were evidences of efforts on the part of certain Kuomintang officials 
to suppress open criticism of the Government. Two well-known 
Chinese members of the Democratic League, one of them a prominent 
university professor, were assassinated by unknown persons (later 
revealed to be members of the Kunming Garrison Headquarters’ secret 
police) and there were indications that Kuomintang secret police were 
intimidating leading Democratic League members and Chinese lib- 
erals in other parts of the country. 

Communist activities during this period, in line with the Yenan 
propaganda attack on the United States policy toward China, began 
to be centered on the United States Marines in China and in mid- July 
the first serious incident involving the Communists and United States 
Marines occurred — the kidnapping of 7 Marines in east Hopei and 
their detention by the Communists for several days before being 
released. This was followed at the end of the month by a deliberate 
Communist ambush of a United States Marine-escorted motor convoy 
bound from Tientsin to Peiping, during which 3 Americans were killed 
and 12 wounded. 22a 

22a Following the Communist ambush on July 29 of the United States Marine 
convoy near Peiping, a fact-finding team of selected personnel from the Execu- 
tive Headquarters was formed at the personal request of the Generalissimo and 
of General Chou En-lai to determine the responsibility and to submit a report on 
the incident. General Marshall delayed the formation of this team until the 
United States Marine Corps investigation of the incident had been completed and 
the Communists had made a personal request for such a team because of the 
anticipated charge by the Communists that the National Government representa- 
tive on the investigating team would automatically side with the American 
member. General Marshall explained this reason to General Chou En-lai. 

The investigation by the fact-finding team from Executive Headquarters en- 
countered great, although anticipated, difficulties. The Communists employed 
delaying tactics and vicious propaganda. General Marshall finally told General 
Chou En-lai that he would not tolerate further delays and misrepresentations. 
He characterized Communist tactics regarding the investigation of this incident 
in emphatic terms and informed General Chou that if there were further delays 
he would withdraw the American representative from the investigating team and 
make a public statement of the facts. General Marshall was reluctant to take 
such action, however, since it would play directly into the hands of the small group 
in the Kuomintang which was blocking his efforts to terminate the fighting, would 
virtually end the usefulness of the Executive Headquarters, and might result in 
a general military conflagration. When General Chou stated that the reports 
received from Communist representatives were completely at variance with those 
from the Americans, General Marshall emphasized to him that it was quite im- 
possible for the United States Army, Navy or Marine Corps personnel to involve 
themselves in deliberate misrepresentation in such an investigation. He further 
said that the American investigators had made no attempt, and did not intend, 
to conceal facts or bend them to their advantage and that he wished to emphasize 
the importance of straightforward action without delay. The testimony of the 



The deterioration of the situation in China and what appeared to be 
the decisive influence of the reactionary political and military group 
around the Generalissimo convinced General Marshall of the desir- 
ability of obtaining the assistance in the mediation effort of an Amer- 
ican of unquestioned character and integrity and with long experience 
in China. With this view in mind, General Marshall recommended 
the appointment of Dr. J. Leighton Stuart, President of Yenching 
University at Peiping, as American Ambassador to China. President 
Truman acted upon this recommendation and on July 11, 1946, the 
United States Senate confirmed the nomination of Dr. Stuart as 
Ambassador to China. 

On July 26, shortly after Dr. Stuart’s arrival at Nanking, General 
Chou En-lai proposed that an order for the unconditional cessation 
of hostilities be issued immediately and that at the same time the 
various arrangements worked out during the negotiations in June be 
put into effect. He further proposed that National Government and 
Communist Party representatives then meet with Dr. Stuart for pre- 
liminary discussion of the reorganization of the Government and local 
government problems and that any agreement reached be submitted 
to the PCC Steering Committee for approval since the reorganization 
of the Government required the approval of all parties. 

In frank discussions at this time with a high-ranking National 
Government official, General Marshall endeavored to impress upon 
him the gravity of the situation. He informed him that the principal 
loss, in his opinion, was the lowering of the Generalissimo’s prestige 
and that this was particularly tragic since the Generalissimo repre- 
sented perhaps the greatest asset China had at this time. He con- 
tinued that the Generalissimo’s advisers were giving him such nar- 
row and prejudiced advice that the situation seemed hopeless and 
that comments had been made to him privately by the Generalissimo’s 
own associates which they could not make openly. He described the 
weakness of the financial and economic structure of the country, which 
argued strongly against civil war, and said that, if the Generalissimo 
continued in his present attitude toward negotiations, civil war was 

two Chinese sides regarding the incident was conflicting and General Marshall 
finally instructed the United States personnel of the investigating team to with- 
draw and submit their own report. This report was to the effect that a Com- 
munist force had ambushed the motor convoy of Executive Headquarters and 
Unbra supplies escorted by a United States Marine unit, that it had killed three 
Marines and wounded 12 others and that no National Government troops were 
present or involved in the incident. 



inevitable. General Marshall pointed out that while the Generalis- 
simo believed that the military situation would develop favorably 
during this lull in negotiations, developments might not occur in ac- 
cordance with his belief. He said that the Generalissimo’s military 
commanders were leading him into an uncontrollable situation and 
that when such a situation materialized these same commanders would 
be appealing for aid which would not be forthcoming. General Mar- 
shall emphasized that the United States would not underwrite a 
Chinese civil war. 

In later conversations with this same official, General Marshall 
emphasized that the tactics being followed by the Government were 
such that in its efforts to prevent communism the Government was 
creating conditions favorable for a Communist regime. He cited as 
an example the existing financial and economic situation which would 
be made more serious by continuation of military operations and 
added that civil war, accompanied by economic chaos, would provide 
fruitful breeding grounds for communism. 

Meanwhile, economic developments were providing grave portents 
of the rapid deterioration that was to come. The resumption of 
military operations was progressively isolating agricultural and 
mining areas from urban centers of consumption and export, and re- 
quired a steady expansion of the currency in circulation to meet the 
Government’s swollen budgetary requirements. These factors com- 
bined to stimulate a rapid, although not yet explosive, inflation, the 
consequences of which were universal commodity speculation and 
hoarding, a low level of exports and emigrant remittances and, in turn, 
the steady depletion of the Government’s foreign exchange reserves. 



On August 1 Dr. Stuart in a long conference with the Generalissimo 
at Killing proposed the organization of a special committee, including 
National Government and Communist Party representatives, with Dr. 
Stuart as Chairman, for the purpose of reaching an agreement for 
the immediate organization of the State Council. 23 In view of the 
apparent impossibility of obtaining the Generalissimo’s agreement 
to the issuance of an order for the termination of hostilities, General 
Marshall and Dr. Stuart considered it advisable to approach the 
problem from another angle. It was their belief that if some prog- 
ress were made by this committee the Generalissimo would be 

For the PCC resolution on the State Council, see annex 64. 


willing to agree to a cessation of hostilities, which were at this time 
increasing in extent throughout North China and were threatening to 
spread into Manchuria. The Generalissimo utilized the Communist 
attack on the United States Marine convoy as a reason for delaying 
decision but agreed to consider the matter. General Marshall and 
Dr. Stuart were of the opinion that there was urgent necessity for 
creating the State Council, which, in effect, would give a form of genu- 
ine legislative action for control or guidance of the Government. 

On August 5 the Generalissimo gave his agreement to the formation 
of a small informal five-man committee to be composed of Government 
and Communist Party representatives, under Dr. Stuart as Chairman, 
for the purpose of reaching an agreement for organization of the State 
Council. On the following day he stipulated five preliminary con- 
ditions which the Communists would have to accept and carry out 
within a month to six weeks: (1) The Communist forces in north 
Kiangsu should withdraw north of the Lunghai Railway; (2) Com- 
munist forces should withdraw from the Tsinan-Tsingtao Railway; 
(3) Communist forces should withdraw from Chengte and areas 
in Jehol Province south of that city; (4) Communist forces should 
withdraw into 2 y 2 provinces in Manchuria (Hsin Heilungchiang, Nen- 
chiang, and Hsingan) ; and (5) Communist forces should withdraw 
from places in Shansi and Shantung Provinces occupied after June 
7. These terms were more exacting than those at the end of June 
when the stalemate had been reached. 

The Chinese Communist Party replied that the National Govern- 
ment made no mention of local government and that the Communist 
Party’s refusal to accept Government demands for taking over local 
administration in areas to be evacuated by Communist troops, which 
had led to the impasse at the end of June, was based on the grounds that 
such a procedure was contrary to the PCC resolutions. 24 The Commu- 
nist Party was willing to agree to the holding of political and military 
discussions simultaneously but would not accept the five Government 
conditions as a condition which must be agreed to prior to discussion 
of political matters. 


At this point in the negotiations, on August 10, 1946, General Mar- 
shall and Ambassador Stuart issued a joint public statement in an 

24 Annex 1 of the PCC resolution entitled “Program for Peaceful National Re- 
construction” : “In those recovered areas where the local government is under 
dispute the status quo shall be maintained until a settlement is made according 
to Articles 6, 7 and 8 of Chapter III on Political Problems in this Program by 
the National Government after its reorganization.” 



effort to bring both sides and the Chinese public to a realization of 
the issues and to arouse public pressure for the termination of 
hostilities. Pointing out that the fighting threatened to pass out of 
control and that the economic situation was most serious, they stated 
that both the Government and the Communist leaders wished to put 
an end to the fighting but that there was still lack of agreement on 
certain issues. The redisposition of troops was one of the issues 
mentioned, but General Marshall and the Ambassador informed the 
Chinese public that a more fundamental issue concerned the charac- 
ter of local governments following such a redisposition . 25 

In very frank conversations with the Generalissimo at this time 
General Marshall outlined his estimate of the situation as follows: 
Events during the weeks following his final talk with the General- 
issimo prior to the latter’s departure for Kuling in July corresponded 
almost exactly with his predictions at that time. The Generalissimo 
had said that he could control the situation in Manchuria and that 
fighting in North China would be local and that, if General Marshall 
were patient, the Communists would appeal for a settlement and 
would be willing to make compromises necessary for such a settle- 
ment. Fighting in North China would, however, under present circum- 
stances soon be completely out of control. Once it spread to Jehol 
Province, Manchuria would be affected, and the result would be a civil 
war beyond his or Communist control. This would be a catastrophe in 
that it would afford an ideal opportunity for the Communists to ex- 
pand and for the U.S.S.R. to support the Chinese Communists, either 
openly or secretly. The Government had much to lose and little to gain 
from hostilities at this time, which might end in the collapse of the 
Government and of the country’s economy. The Generalissimo must 
remember that the long lines of communication and the terrain fa- 
vored the employment of Communist guerrilla tactics. General Mar- 
shall’s objective, beyond that of a unified and rejuvenated China, was 
not what some of the Generalissimo’s advisers seemed to think — that 
is, to put the Communist Party in control. He opposed the policy 
of the Generalissimo and his immediate advisers because he thought 
that the procedure of the National Government would probably lead 
to Communist control in China ; the chaotic conditions then developing 
would not only weaken the Kuomintang but would also afford the 
Communists an excellent opportunity to undermine the Government. 
Information reaching General Marshall from a wide variety of sources 
indicated a serious lowering of Kuomintang prestige, and criticism of 
Kuomintang governmental procedure was increasing daily. The most 

25 See annex 84. 


serious consequence of the situation was its profound injury to the 
prestige of the Generalissimo, which was perhaps China’s greatest 


After frequent conferences the Generalissimo indicated his willing- 
ness to make an effort to reach agreement with the Chinese Commu- 
nists for the organization of the State Council through the Five-Man 
Committee, but he was not willing to agree to a termination of the 
fighting until his five conditions had been met. The Generalissimo 
informed General Marshall that even this concession was a great one 
and involved a military risk on the part of the Government. General 
Marshall did not agree with this view and considered that the greater 
risk was involved in the continuation of the fighting. 

On August 13 the Generalissimo issued a public statement which was 
indicative of his attitude. 26 The entire blame for the breakdown in 
the negotiations and the economic distress in the country was laid at 
the door of the Chinese Communists. He described the Government’s 
policy as follows: (1) the ending of the period of political tutelage 
and establishment of constitutional government; (2) adherence to the 
PCC resolutions; (3) broadening of the basis of the Government by 
the inclusion of members of all parties and non-party persons to carry 
out the PCC Program of Peaceful National Reconstruction; (4) ad- 
herence to the cessation of hostilities agreement of January 10, with 
the proviso that the Communists withdraw from areas “where they 
threaten peace and obstruct communications”; (5) the use of political 
means to settle political differences, but only if the Communists gave 
assurance and evidence that they would carry out the various agree- 
ments reached; and (6) the protection and security of the people and 
their properties and the removal of any threat to peace. 


On August 22 General Chou En-lai expressed his willingness to par- 
ticipate in the meetings of the Five-Man Committee to discuss the 
organization of the State Council. There were two issues connected 
with this question: (1) the allocation of seats on the Council among 
the political parties and the non-party group and (2) the veto power 
in the Council in connection with the carrying out by the reorganized 
Government of the Program for Peaceful National Reconstruction 
agreed upon by the PCC and constituting one of the PCC resolutions. 

28 See annex 85. 



The military situation was growing more serious day by day and 
there was at this time an immediate threat of an outbreak of fighting 
in Jehol Province, northeast of Peiping. The Chinese Communist 
Party had issued a general mobilization order, which the Communists 
contended was a defensive measure against what they considered to be 
the purpose of the National Government to settle issues by military 
force. The fact of the matter was that each side took the stand with 
General Marshall that the other was provoking the fighting and could 
not be trusted to go through with an agreement. The effort of Gen- 
eral Marshall and Ambassador Stuart with respect to the State Coun- 
cil was another move, on a higher level, to break the stalemate and 
make it possible to terminate hostilities. 

In late August the Generalissimo gave his formal agreement to the 
creation of the Five-Man Committee to pave the way for the formation 
of the State Council and also agreed that the conclusions of this group 
would be presented to the PCC Steering Committee for approval in 
accordance with the PCC resolutions. Shortly thereafter he ap- 
pointed the National Government’s two members of the Committee. 
At the same time he indicated that he had not in any way moderated 
his insistence on the five conditions to be met by the Communists in 
order to bring about a cessation of hostilities. In view of these five 
conditions General Chou En-lai expressed doubt regarding the pro- 
posal for creating the State Council, contending that it would only 
serve to give false encouragement to the public since the Generalis- 
simo had no intention of facilitating the cessation of hostilities by 
moderating his previous terms. 

Under these circumstances, General Marshall and Ambassador 
Stuart were concentrating on the measures to create the State Council 
as at least one definite step toward governmental reorganization that 
might exert an influence sufficient to furnish a basis for the termina- 
tion of the fighting. The Generalissimo informed General Marshall 
that all that was necessary was for the Chinese Communists to stop 
fighting and abide by the terms of the cease-fire order of J anuary 10, 
although under questioning he admitted that he was not moderating 
his five conditions. 

In the meantime the National Government continued its offensive 
in north Kiangsu, cleared the Communists from the Tsinan-Tsingtao 
Railway and captured Chengte, capital of Jehol Province, on August 
29. These were all points covered by the five Government conditions. 
The Communist forces launched an attack along the Lunghai Railway 
between Hsuchow and Chengchou and began their siege of Tatung in 
early August. 


AUGUST 1946 


In the meantime, on August 10, 1946, President Truman had for- 
warded to the Generalissimo a personal message, in which the Presi- 
dent had expressed his concern at the deteriorating situation in China 
and at the actions of selfish interests of extremist elements, equally 
in the Kuomintang and the Chinese Communist Party. The Presi- 
dent described the growing conviction that an attempt was being made 
to settle major social issues by resort to force rather than by demo- 
cratic procedures. He pointed out that it was still the firm desire 
of the American Government and people to assist China to achieve 
lasting peace and a stable economy under a truly democratic govern- 
ment, but that unless convincing proof were shortly forthcoming that 
genuine progress was being made toward a peaceful settlement of 
internal Chinese problems, it would be necessary for the President to 
redefine and explain the position of the United States to the Ameri- 
can people. 27 


To this the Generalissimo replied on August 28. 28 The reply placed 
the blame for the fighting on the Communists and charged that the 
aim of Communist policy was to use armed force to seize political 
power, overthrow the Government, and install a totalitarian regime. 
He stated that while mistakes had been made by some National Gov- 
ernment subordinates they had been minor in scale compared with the 
flagrant violations of the Communists and that the National Govern- 
ment had dealt sternly with its offenders. The Generalissimo pro- 
claimed his policy of broadening the basis of the National Government 
by the inclusion of all parties and non-party personnel and said that 
success must depend upon the sincerity of the Communists in re- 
sponding to the National Government’s appeals. 


In view of the generally unsatisfactory nature of Generalissimo 
Chiang Kai-shek’s reply of August 28 to President Truman’s per- 
sonal message and the continued deadlock in the negotiations, the 
President forwarded a further message to the Generalissimo in which 
he emphasized that the prompt end of the threat of civil war in China 

27 See annex 86. 

” See annex 87. 



through the establishment of political unity would make it feasible 
for the United States to proceed with its plans further to aid China 
in the rehabilitation of its industrial and agricultural economy. 29 



The signing of an agreement between the Chinese and United States 
Governments on August 30, 1946, for the sale of United States Govern- 
ment surplus property in various islands of the Pacific was the occasion 
for the issuance of a statement by the Chinese Communist Party at 
Shanghai attacking the United States for extending large-scale mili- 
tary aid to the National Government. General Marshall had ex- 
plained to General Chou En-lai the background of the negotiations 
leading to the signing of this agreement prior to its actual completion 
and had explained that the surplus property in question did not 
contain combat materiel but consisted of machinery, motor vehicles, 
communications equipment, rations, medical supplies and various 
other items which would be of considerable value in the rehabilitation 
of the Chinese economy. The transaction could not be held in abey- 
ance until the two Chinese groups settled internal differences which 
had existed over a long period of years. The alternative was to de- 
prive China and its people of the opportunity to acquire materials 
beneficial to its reconstruction. 

In view of continued Chinese Communist propaganda attacks on the 
surplus property agreement of August 30, 1946, General Marshall 
gave a very detailed explanation of this transaction to the Communist 
Party representative. He pointed out that this transaction had been 
under discussion since the beginning of 1946 and had almost been 
settled at the time of General Marshall’s departure for the United 
States in March. During his visit to the United States he had ironed 
out most of the difficulties involved and the failure to reach an agree- 
ment on this transaction in February had resulted from Chinese 
Government efforts to improve the terms. The alternative to com- 
pleting an agreement with China for the sale of this surplus property 
was the immediate disposal of the property to other governments in 
the Far East or dumping it in the ocean, courses of action which 
would have deprived China of material of considerable importance 
in the economic rehabilitation of the country. General Marshall con- 
tinued that Chinese Communist propaganda had imputed to this 
transaction every evil purpose possible and that great harm had thus 


See annex 88. 


been done. He concluded that while he accepted this propaganda as 
inevitable, he was greatly disturbed when a proposal such as that for 
the informal Five-Man Committee was being destroyed as a result of 
such propaganda. The Chinese Communist Party representatives, 
however, continued to be critical of the surplus property agreement on 
the grounds that items such as trucks, communications equipment and 
army rations and uniforms would be used for civil war purposes and 
other items would be sold on the market and the proceeds thereof 
expended for military purposes. 

With respect to United States military aid programs 30 General 
Marshall was being placed in the untenable position of mediating 
on the one hand between the two Chinese groups while on the 
other the United States Government was continuing to supply arms 
and ammunition to one of the two groups, namely, the National 
Government. Action was therefore taken in August to suspend 
certain portions of these programs which might have a bearing on 
the continued prosecution of hostilities in China. Licenses were not 
granted for the export to China of combat type items of military 
equipment and in late September shipments of combat items from the 
Pacific area to China were temporarily suspended. (On October 22, 
1946, the suspension was lifted to permit the delivery of civilian type 
items for the Chinese Air Force.) This ban was imposed at a time 
when the National Government was gradually increasing the tempo 
of its military campaign and when its reserves of materiel were ample. 
The ban apparently had little effect, since it was not until November, 
when the National Government had reached the peak of its military 
holdings, that the National Government issued an order for the cessa- 
tion of hostilities. By that time the Government’s forces had occupied 
most of the areas covered by its demands to the Chinese Communists 
in June and during later negotiations and had reached what turned 
out to be the highest point of its military position after Y-J Day. 


By September 3 both Chinese groups had named their representa- 
tives to the informal Five-Man Committee. Agreement on the com- 
position of the Committee did not, however, mean that Committee 
meetings were assured. The Chinese Communist Party continued to 
insist on the receipt of assurances from the Government that the 
latter would issue orders for the cessation of hostilities when agree- 
ment should be reached in the Committee. 

See chapter VII. 



In referring to the informal Five-Man Committee General Mar- 
shall pointed out to the Chinese Communist Party representative that, 
when this proposal was presented to the Generalissimo, the latter 
had said that it would not be an effective procedure since the Commu- 
nists would immediately introduce other matters which would so com- 
plicate the discussions that no progress would be made. General 
Marshall had informed the Generalissimo that Dr. Stuart would act 
as chairman of the Committee only during discussion of State Council 
issues and that if other issues were brought up Dr. Stuart would 
withdraw from the discussions. General Marshall further explained 
to the Communist Party representative that he had exerted every 
effort and every argument to end the impasse and obtain a cessation 
of hostilities and that he had ignored the attacks on him personally, 
both those made publicly by the Communists and those made by 
individuals within the Government who were opposed to almost 
everything he had been trying to accomplish. 

The Chinese Communist Party attitude toward the proposal for the 
informal Five-Man Committee was that it would agree to participate 
in the discussions of the Committee upon the receipt of a guarantee 
that cease-fire arrangements would be made and that the Government 
would drop its five conditions after the Committee reached a formula 
for Government reorganization. The Communist representative 
also stated that the Communist Party would not name its mem- 
bers to the State Council while fighting continued because the Gov- 
ernment apparently wished to have the State Council decide upon 
cease-fire arrangements. He pointed out that if the matter were left 
to the State Council, the Kuomintang, together with the Youth Party, 
would have a majority of the votes and any cease-fire arrangements 
would thus be on Kuomintang terms. The Communists desired that 
the Committee of Three handle such arrangements. In brief, the 
Communist Party position was that it would participate in the discus- 
sions in the Five-Man Committee provided that, when a basis of agree- 
ment should be reached, a cease-fire order would be issued. It desired 
that an unconditional cease-fire order be issued or that the Committee 
of Three meet immediately to discuss this question. 

Following several days of conferences at Killing between the Gen- 
eralissimo and General Marshall, the former indicated that certain 
terms were acceptable to him. He agreed that the settlement of the 
military terms for the cessation of hostilities would be made by the 
Committee of Three and not by the State Council provided the Com- 
munist Party agreed to have the Committee of Three take action on 
the various issues discussed by that Committee in June. These were 
the questions of restoration of communications, the terms for the 


termination of hostilities and the redistribution of troops in Man- 
churia and the military reorganization of the armed forces which 
would stipulate the places where Communist troops were to be sta- 
tioned. The Generalissimo had yielded on one important point by 
agreeing that the question of local government could be referred to the 
State Council after its establishment. He also expressed his willing- 
ness to have the Constitutional Reviewing Committee resume its work 
when the Five-Man Committee had reached agreement and its con- 
clusions had been approved by the PCC Steering Committee but said 
that, prior to the issuance of a cease-fire order, the Communist Party 
must name its representatives to the National Assembly. General 
Marshall had gained the impression from statements by the Gen- 
eralissimo that he considered that practically all the points covered by 
his five conditions would be automatically taken care of by his insist- 
ence on continued Government military occupation of places recently 
occupied by its troops. It was also the impression of General Marshall 
that reorganization of the Executive Yuan would take place after the 
convening of the National Assembly. 

When these terms were transmitted to General Chou En-lai, he 
expressed the view that, except for the proposal for the Five-Man 
Committee to discuss the reorganization of the State Council, the 
entire procedure in connection with political considerations outlined 
by the Generalissimo was contrary to the PCC resolutions. The Com- 
munist Party asked, therefore, that the Committee of Three be con- 
vened immediately to find some basis for the issuance of a cease-fire 

General Marshall considered that the Communist Party proposal 
meant a return to the impasse at the end of June which Dr. Stuart 
and he had been endeavoring to break through by the proposal for the 
reorganization of the State Council. He pointed out that unless the 
Committee of Three meeting were paralleled or preceded by efforts to 
reorganize the State Council, the situation had merely returned to 
the previous deadlock. It was General Marshall’s position that the 
stand taken by the Chinese Communist Party was harmful to it, as 
the Government probably wanted all the time possible for military 
operations and time was thus to its advantage. 

During this period the Communist representatives continued to 
insist on two points: (1) assurances from the Government that the 
Communists would be able to control sufficient votes in the State 
Council to veto any revision of the PCC resolutions, and (2) the early 
issuance of a cease-fire order. 

The Generalissimo indicated at this time that he would not agree to 
a meeting of the Committee of Three until the Five-Man Committee 



should meet and give indication of reaching an agreement for the 
organization of the State Council and all that it was necessary for 
the Communists to do in connection with the National Assembly was 
to submit a list of their delegates. The Generalissimo also indicated 
that he would not agree to informal discussions of the State Council 
issues by Government members of the Five-Man Committee prior to 
the formal meetings of the Committee, but that he would agree spe- 
cifically that the two questions of the allocation of seats in the Council 
and the veto power would be the subjects for that Committee to discuss 
and settle. 

On September 16 General Chou En-lai departed from Nanking for 
Shanghai. Prior to his departure he forwarded to General Marshall 
three memoranda. The first memorandum outlined United States aid 
to the Chinese Government, described it as contributory to civil war, 
protested the sale of United States Government surplus property to 
the Chinese Government, and demanded that the United States Gov- 
ernment freeze all supplies and shipping covered by the surplus prop- 
erty agreement pending a settlement in China and the restoration of 
peace and unity and establishment of a coalition government. The 
second memorandum requested the convening of the Committee of 
Three to discuss the issuance of an order for the cessation of hostili- 
ties. 31 The third memorandum announced the departure of General 
Chou for Shanghai and said that he would return as soon as a meeting 
of the Committee of Three should be convened. 32 

The Generalissimo, when informed of the situation, said that he 
would not agree to Government participation in the Committee of 
Three until the Five-Man Committee had been convened and had 
given some indication of reaching an agreement. He did agree, how- 
ever, to a compromise proposal presented by General Marshall regard- 
ing the allocation of seats in the State Council, which would have given 
the Communists within one vote of a veto power to block revision of the 
PCC resolutions, on the assumption that there was certain to be at 
least one liberal-minded, independent councillor who would vote 


During this period of negotiations, there had been little change in 
the position of the Chinese Communists. They continued to insist 
that a solution for the cessation of hostilities issue was a prerequisite 
to their participation in the Five-Man Committee discussions looking 
toward the organization of the State Council, although they did finally 

81 See annex 89. 

“ See annex 90. 


agree to enter into Committee discussions provided the Committee of 
Three should meet simultaneously to discuss the cessation of hostili- 
ties ; they demanded that the Generalissimo’s five conditions be dropped 
after a basis for the State Council should have been reached in 
the Five-Man Committee ; they stated their refusal to name their mem- 
bers of the State Council, in the event of agreement on a formula for 
the Council, until hostilities should cease; and they indicated their 
desire that the PCC Steering Committee should discuss the reorgan- 
ization of the Executive Yuan. The greatest concern of the Com- 
munists during this period was for the cessation of hostilities and for 
assurances that the PCC resolutions would not be modified ; to this 
latter end they insisted on some formula in the veto power arrange- 
ment which would ensure that the PCC resolutions would not be 
changed, as they apparently felt that their safety lay in the retention 
of the decisions of the PCC. 

The Government position during this period was less fixed: The 
Government first placed the blame on the Communists for the initia- 
tion of the fighting and thus insisted that there was no need to issue 
a cease-fire order ; the Government stated at the beginning of Septem- 
ber that it would not abandon the Generalissimo’s five conditions; 
and Government spokesmen indicated that all issues regarding a truce 
and the settlements in various areas were to be discussed in the State 
Council. Subsequently, however, after an earlier refusal to consider 
the convening of the Committee of Three, the Generalissimo agreed 
to permit that Committee to settle the cessation of hostilities issue 
provided the Communists would carry out certain tentative agree- 
ments reached during June and, in effect, abandoned the five con- 
ditions through agreement to permit the Kiangsu local government 
problem to be settled by the State Council. Government military ad- 
vances had in any case more or less made the carrying out of most 
of these five conditions a fait accompli. The Generalissimo also agreed 
to the summoning of the Constitutional Reviewing Committee as soon 
as the Five-Man Committee should have reached an agreement and 
this agreement should have been confirmed by the PCC Steering Com- 
mittee, thus providing some assurance to the Communists of con- 
formity with PCC procedures. He had, however, posed an additional 
condition by stipulating that he would not agree to the cessation 
of hostilities until the Communists should have named their 
delegates to the National Assembly, a procedure which the Com- 
munists characterized as not in conformity with the PCC resolutions ; 
and he had indicated that the Executive Yuan would not be re- 
organized until the National Assembly should have convened, al- 
though the PCC resolutions envisaged the reorganization of the Execu- 



live Yuan prior to that time. The Generalissimo also indicated that 
he contemplated continued Government military occupation of the 
places occupied in its military campaign. Toward the end of this 
period of negotiations, the Generalissimo agreed to the convening of 
the Committee of Three when the Five-Man Committee should have 
given evidence of having reached agreement on the State Council, 
but he would not agree to informal meetings of the Five-Man Com- 
mittee prior to its formal meetings. 

The positions of the two parties thus continued irreconcilable. 
General Marshall and Dr. Stuart had endeavored to break the dead- 
lock through the proposal for the Five-Man Committee as a step lead- 
ing toward the cessation of hostilities. They had exerted strong 
pressure on the Generalissimo in an effort to obtain his concurrence 
to this proposal only to meet with Communist refusal to participate 
in the meetings of the Committee. Propaganda campaigns, as usual, 
played a part in wrecking their efforts, as they led to confusion and 
misunderstandings. The most bitter of these campaigns was that di- 
rected by the Communist Party against the American Government 
and the surplus-property transaction. Communist distrust and Com- 
munist practices of distortion and disregard of the truth imputed to 
this transaction an evil purpose intended to further civil war in China, 
which was utterly contrary to the facts. The Generalissimo had frank- 
ly told General Marshall that the conclusion of an agreement for the 
termination of hostilities was his final trump card in forcing the 
Communist Party to name its delegates to the National Assembly. 
Since the Communist Party considered this as a sixth condition to be 
added to the previously announced five conditions, they were pressing 
for the more immediate issue, as they saw it, of terminating the 

On September 19, in response to an oral request from the Com- 
munist Party representative at Nanking, General Marshall communi- 
cated to General Chou En-lai at Shanghai the National Government 
reaction to General Chou’s request for a meeting of the Committee of 
Three. 33 In a further memorandum from Shanghai, General Chou 
again repeated his request for a meeting of the Committee of Three 
and indicated that unless the meeting were convened he would be 
compelled to make public all the important documents in the negotia- 
tions since the June truce period. 34 General Marshall made it very 
clear to the Communist Party representative at Nanking at this time 
that in view of the vicious Communist propaganda attacks directed 
against his personal integrity and honesty of purpose, which were 

" See annex 91. 

“ See annex 92. 


being paralleled by repeated private requests from the Communists 
that he continue his mediation efforts, he wished to emphasize that such 
a procedure would no longer be tolerated — if the Communists doubted 
his impartiality as a mediator, they needed only to notify him accord- 
ingly and he would immediately withdraw from the negotiations. 

In discussions of the situation with high-ranking National Govern- 
ment representatives at this time, General Marshall impressed upon 
them the delicacy of the situation and the possibility that, if the 
situation continued to deteriorate, the Communists would be driven 
to seek and be dependent upon outside support, such as Russian aid, 
which would make the task of peaceful settlement much more difficult. 

Since the Generalissimo was expected to return to Nanking from 
Ruling, where he had been since mid- July, General Marshall and 
Dr. Stuart addressed a joint letter to General Chou En-lai at Shanghai 
asking that he also return to Nanking in order that further efforts 
could be made to achieve a peaceful arrangement. 35 General Chou 
maintained in his reply his previous stand that he would prefer to 
await the convening of the Committee of Three. 36 

Upon the return of the Generalissimo to Nanking and pursuant to 
his request for advice regarding the issuance of a public statement, 
General Marshall suggested on September 27 that the Government 
propose the convening of the Five-Man Committee and the Committee 
of Three with the understanding that the agreements tentatively 
reached in June be carried out, that the Committee of Three decide 
the problem of the military reorganization and integration agreement, 
that the PCC Steering Committee confirm whatever conclusions were 
reached by the Five-Man Committee, that all local government issues 
be settled by the State Council and that concurrently with the cessation 
of hostilities the Communist Party publish the list of its delegates to 
the National Assembly. General Marshall set forth these procedures 
in a draft statement for approval by the Generalissimo and possible 
use. 37 General Marshall suggested that these arrangements be 
accompanied by Government action to secure the immediate cessation 
of hostilities. 

It was the view of General Marshall that, if the Communists 
expressed agreement to the general terms and procedures outlined, 
an order for the cessation of hostilities should be immediately issued 
and the Five-Man Committee and the Committee of Three should 
meet at once. The Generalissimo subsequently informed General 
Marshall that after study of this suggestion he had come to the 

“ See annex 93. 

86 See annex 94. 

87 See annex 95. 



conclusion that the several agreements indicated should be completed 
prior to the cessation of hostilities — in brief, the Committee of Three 
would have to reach complete agreement on the redisposition of troops 
for demobilization and integration of the armies and the Five-Man 
Committee would also have to reach an agreement prior to the issuance 
of a cease-fire order. It was the opinion of General Marshall that 
such a procedure would completely vitiate the entire purpose of his 
suggestion. The Generalissimo later informed General Marshall that 
he had decided not to release any public statement at that time. 


During this period the National Government began an advance 
against Kalgan, an important Communist-held city northwest of 
Peiping. The Chinese Communists, who had been beseiging Tatung 
(north Shansi) since early August, announced the formal lifting of 
the siege of that city in order to meet the Government charge that 
Kalgan was being attacked because the Communists were threatening 
Tatung. On September 30 the Kuomintang Central News Agency 
announced that Government forces had begun operations for the 
purpose of capturing Kalgan. On the same day the Communist 
Party announced publicly its refusal to name its delegates to the 
National Assembly unless certain PCC procedures were observed. 

It was against this background that General Chou En-lai addressed 
a memorandum to General Marshall on September 30 pointing to the 
Government attack on Kalgan, one of the political and military centers 
of the Communist Party, and stating that if the National Government 
did not cease military operations against Kalgan the Communist Party 
would be compelled to presume that the Government was giving public 
indication of a “total national split” and its abandonment of a peaceful 
settlement. 38 The Communist Party representatives stated orally that 
the cessation of the Government drive against Kalgan was a 
prerequisite to Communist participation in simultaneous meetings of 
the Committee of Three and the Five-Man Committee. 


On October 1, 1946, in a conference with Chinese Communist Party 
representatives at Nanking, General Marshall made it clear to them 
that he was in agreement with neither the Communist Party’s course 
of action nor that of the National Government. He said that the 
situation had almost reached the point where he would not continue 
in the position of a mediator and that he could no longer continue to 
be a middleman in a prolonged series of accusations and counter- 

See annex 96. 


accusations, of proposals and counterproposals. General Marshall 
stated that he had to give first consideration to the position of the 
Government that he represented. He pointed out that while he was 
struggling with the Chinese Government in an effort to have terms 
proposed which would have a fair chance of acceptance by the Chinese 
Communist Party, the latter had come forward with an announcement 
of refusal to name its delegates to the National Assembly. While he 
was struggling with the Chinese Communists in an effort to reach a 
basis for agreement, the Government had publicly announced its attack 
on Kalgan. This type of procedure had continued week after week and 
month after month. He said that he wished to emphasize that the 
procedure followed by the Communists was inevitably productive of 
long delay during which military operations were continuing. He 
concluded, however, that he was willing to discuss General Chou’s 
memorandum of September 30 with the Government and would do 
his best to prevail upon the Government to take action which would 
increase the possibility of peaceful settlement. 

General Marshall decided at this time that he would not carry oral 
messages to the Chinese Communists but would transmit only written 
communications from the Government. 

He felt that the United States Government could not continue 
to be a third party to the existing procedure under which the Govern- 
ment had been proceeding with its “local operations” for 3 months. 
He thought it apparent that the National Government’s campaign 
against Kalgan could be justified only on the basis of a policy of 
force. He felt that he could not put himself in the position of mediat- 
ing during a continued series of military campaigns and that he must 
have positive assurances from the National Government that there 
was a reasonable basis for compromise which offered possibility of 


In view of the existing situation, General Marshall addressed a 
memorandum to the Generalissimo on October 1, in which, after stat- 
ing that he was not in agreement with the present course of the Gov- 
ernment or of the Communist Party, he concluded : 

“I wish merely to state that unless a basis for agreement is found 
to terminate the fighting without further delays of proposals and 
counterproposals, I will recommend to the President that I be recalled 
and that the United States Government terminate its efforts of 

Earlier in the memorandum General Marshall stated that he had 
carefully considered all the factors involved in the current status of 



negotiations and military operations and had also taken into consider- 
ation the most recent developments, such as the Communist Party’s 
announcement of its refusal to submit a list of Communist delegates 
to the National Assembly unless certain PCC procedures were met, 
the Kuomintang Central News Agency announcement of the Govern- 
ment operations against Kalgan, certain informal proposals presented 
by Dr. T. V. Soong, and the memorandum of September 30 from 
General Chou En-lai. 39 

On the following day the Generalissimo gave Ambassador Stuart 
an oral account of the reply which he expected to make to General 
Marshall’s memorandum. He indicated that he was aware of Gen- 
eral Marshall’s embarrassment in the existing situation and that he 
always kept his problems in mind. He felt, however, that it was 
absolutely essential to the national welfare that the Government gain 
control of Kalgan and that the occupation of this city by the Govern- 
ment would do much to prevent further military action by the Chinese 
Communists. The Generalissimo’s statement served to convince Gen- 
eral Marshall almost completely that the time had come for his recall 
from China since the Generalissimo was certainly following a definite 
policy of force under cover of the protracted negotiations. The Gen- 
eralissimo had now completely reversed the position he had taken in 
June when he had agreed that the Communists would be permitted 
to retain possession of Kalgan, which they had occupied shortly after 
V-J Day. 

On October 2 the Generalissimo forwarded to General Marshall a 
reply to the latter’s memorandum. 40 Referring to General Marshall’s 
memorandum the Generalissimo said that 

“the Government hereby, with all frankness, expresses its maximum 
concessions in regard to the solution of the present problem”. 

These “maximum concessions” were as follows: (1) While the Gov- 
ernment had originally agreed that the Communist Party be allocated 
8 seats and the Democratic League 4 seats on the State Council, it 
would now offer 1 seat to a member of the independent group who 
would be recommended by the Chinese Communist Party and agreed 
upon by the Government. This would make a total of 13 seats held by 
Councillors satisfactory to the Communist Party, which should with- 
out delay submit the lists of its members on the State Council and of 
its delegates to the National Assembly. (2) The location of the Com- 
munist troops under the military reorganization plan should be 
determined immediately and the Communist forces should enter such 
locations according to agreed dates, the foregoing to be decided upon 

89 See annex 97. 

40 See annex 98. 


by the Committee of Three and carried out under the supervision of 
the Executive Headquarters. The memorandum concluded that if 
the Communists agreed to these two proposals “a cease-fire order should 
be issued by both sides, when agreement has been reached thereon.” 

The reply of the Generalissimo involved lengthy procedures during 
which the attack on Kalgan would be carried to its conclusion and it 
omitted any reference to the disposition of Government troops, which 
was a requirement of the military reorganization agreement of Febru- 
ary 25. General Marshall did not think that the United States 
Government could afford to be a party to a course of questionable 
integrity and he felt that this fact should be made unmistakably clear 
to the Chinese Government. 

In a long conference on October 4, the Generalissimo informed Gen- 
eral Marshall that his departure from China was unthinkable and that 
he could not possibly cease his efforts at mediation, since the crisis 
in China was the most important in the world and his efforts were of 
great historic significance. General Marshall explained that his own 
actions and position and those of the United States Government as 
represented by him were in question under the existing situation. He 
stated that he was convinced that a campaign of force was in progress 
and that negotiations could be described as a cover for this campaign — 
under such circumstances he could no longer participate in the negotia- 
tions. He continued that in June the Government had agreed that 
Kalgan would be left in Communist hands at a time when the Govern- 
ment was in a much weaker military position than at this time — 
Chengte had now been captured, most of Hopei and Jehol Provinces 
had been occupied, Government troops had advanced well beyond 
Peiping in the direction of Kalgan and Government forces were on the 
verge of occupying Chihfeng and Tolun, both important strategic 
points. The present procedure, said General Marshall, clearly meant 
a campaign of force and not a settlement by negotiation. General 
Marshall pointed out that at the end of June he had opposed the whole 
procedure in prospect for July and August, when the Generalissimo 
had declined to accept the agreements openly reached and had stated 
there would be only local fighting in China proper and no fighting in 
Manchuria. He continued that he had not only disagreed with that 
conception but had thought that it inevitably meant the development 
of a full-fledged civil war beyond Government or Communist control 
for a long time to come. This conference ended without any indication 
on the part of the Generalissimo that he would halt the drive against 
Kalgan. General Marshall informed the Generalissimo in conclu- 
sion that he regretted to inform him that nothing had transpired in the 
discussion to cause him to alter his point of view — in fact, he was the 



more convinced that the United States Government was being placed 
in a position where the integrity of its actions could be successfully 
questioned and that he must, therefore, recommend to President Tru- 
man his recall. 

On the following day General Marshall forwarded a message to 
Washington recommending his recall, the pertinent portions of which 
are as follows : 

“I feel that despite the present vicious Communist propaganda of 
misrepresentation and bitter attacks and despite the stupid failure 
of the Communists to agree to the Five-Man Committee under Dr. 
Stuart, actuated in our opinion through fear of the very delays which 
have resulted from this refusal, the United States Government cannot 
afford before the world to have me continue as mediator and should 
confidentially notify the Generalissimo accordingly. I believe that 
this is the only way to halt the military campaign and to dispel the 
evident belief of the Government generals that they can drag along 
the United States while carrying out their campaign of force. It is 
suggested for your approval that the following message be sent by 
the President to the Generalissimo : 

“ ‘General Marshall recommends that his mission be terminated and 
that he be recalled. He has explained to you that he feels that a con- 
tinuation of mediation under present circumstances of extensive and 
aggresive military operations would place the United States Govern- 
ment in a position where the integrity of its actions as represented by 
him would be open to serious question. I deplore that his efforts 
to bring peace to China have been unsuccessful, but there must be no 
question regarding the integrity of his position and actions which 
represent the intention and high purpose of the United States Gov- 
ernment. I, therefore, with great regret have concluded that he should 
be immediately recalled.’ ” 

When word reached the Generalissimo through Ambassador 
Stuart of General Marshall’s action, the Generalissimo expressed his 
willingness to stop military advances against Kalgan for a period of 
five days, possibly even longer if the American mediators insisted, on 
condition that the Communist Party would immediately participate in 
meetings of both the Five-Man Committee and the Committee of Three 
and that Kalgan would be the first issue negotiated. The Generalis- 
simo also requested that General Marshall and Dr. Stuart discuss the 
matter with him on the following morning. Upon the receipt of this 
message from the Generalissimo, General Marshall requested the De- 
partment of State not to transmit to the President his recommendation 
that he be recalled, pending the receipt of further instructions. 



In discussion with the Generalissimo of the Kalgan truce proposal, 
General Marshall made clear that a short truce would not allow time 
for successful negotiations, particularly with the threat of the resump- 
tion of aggressive military action, and a long truce would be too diffi- 
cult to control in view of the complications to be faced by the military 
commanders in the field and their own aggressive attitudes. General 
Marshall suggested that the proposal which he had presented to the 
Generalissimo on September 27 be considered — this involved an imme- 
diate cessation of hostilities once the Communist Party agreed to the 
procedure specified. The Generalissimo said that he was unwilling 
to agree to this proposed procedure, and insisted that the cessation of 
hostilities must depend upon the successful completion of the meet- 
ings of the Committee of Three and the Five-Man Committee. The 
Generalissimo said he would, however, order a truce of five days on the 
basis of Communist agreement to meetings of the Committee of Three 
and the Five-Man Committee as outlined in his memorandum of 
October 2. After some discussion, the Generalissimo agreed to extend 
the truce period to 10 days and indicated that if, as the end of the 
truce approached, it appeared that the Chinese Communists were in a 
mood to negotiate, he would lengthen the period. He requested that 
the truce be announced as a proposal from General Marshall and Am- 
bassador Stuart rather than from the National Government. General 
Marshall and Dr. Stuart agreed to this request even though it was not 
their proposal — it merely represented the best terms they could obtain. 

General Marshall prepared a memorandum 41 outlining the condi- 
tions of the truce as agreed to by the Generalissimo and sent it to Dr. 
Stuart, who communicated it orally to a Chinese Communist Party 
representative, and on the following day sent a copy to this Communist 
representative and an additional copy to General Chou En-lai at 
Shanghai. The conditions of the truce were as follows : (1) The pur- 
pose of the truce was “to carry out the two proposals of the Generalis- 
simo” in his communication to General Marshall of October 2; 
(2) during the truce period Executive Headquarters field teams would 
check on its observance; and (3) public announcement of the truce 
would be made by Dr. Stuart and General Marshall without any 
announcement from the two parties. 

At the same time General Marshall requested the Department of 
State to inform President Truman of the foregoing events and of 
General Marshall’s decision to withdraw the recommendation for 
his recall. 

41 See annex 99. 



The Chinese Communist Party rejected this truce proposal on the 
grounds that there should be no time limit to the truce period and that 
discussions in the Committee of Three and the Five-Man Committee 
should not be limited to the two proposals in the Generalissimo’s 
memorandum of October 2 since discussion of these topics during a 
truce would be considered as negotiation under military coercion. 42 


The Chinese Communist Party’s rejection of the truce proposal 
placed General Marshall in a position entirely opposite from the one 
he had previously held in opposing continued aggressive military 
action. It was now the Government which had offered at least a tem- 
porary cessation of hostilities and the Communists who declined. 
General Marshall and Ambassador Stuart then issued a joint public 
statement on October 8 in regard to the situation. 43 The statement 
began with a description of General Chou En-lai’s memorandum of 
September 30 on Government military operations against Kalgan and 
the Communist attitude thereto. It was a recital of the negotiations 
from the time of the receipt of General Chou’s memorandum asking 
for a cessation of the attack on Kalgan to the time of the Communist 
Party rejection of the 10-day truce proposal. 


In discussions with General Marshall and Dr. Stuart, Communist 
Party representatives stated the Communist views : The Communist 
Party wanted a definite cessation of the attack on Kalgan and the 
only way for the Government to show its sincerity was to withdraw 
its troops to their original positions. The Communists had hoped 
that General Marshall and Dr. Stuart would be able to make the 
Government realize that it was assuming the role of a victor over 
the vanquished and that they would also be able to make the Gov- 
ernment change its policy of war, but the Communists had now lost 
hope. They appreciated very much the efforts of General Marshall 
and Dr. Stuart, but China, they said, was now in the midst of civil war. 
The Communists hoped that General Marshall and Dr. Stuart would, 
on the one hand, have the United States Government cease its aid to 
the Chinese Government and, on the other hand, “have a fair mediating 
process which would be acceptable to both sides.” General Marshall 
replied that he did not accept this statement regarding the United 
States Government and that he did not like the inference of the sec- 
ond portion of this statement. He concluded that he very much 
feared that his efforts in the negotiations had terminated. 

* See annex 100. 

41 See annex 101. 



In view of the unsatisfactory nature of this conversation and with 
the desire to do everything possible at this critical period, General 
Marshall proceeded to Shanghai to see General Chou En-lai. In their 
conversation it developed that some misunderstanding had arisen 
from the wording of the terms of the truce proposal which had led 
to uncertainty whether the Communist Party was to give considera- 
tion to the two proposals of the Generalissimo or to “carry out” such 
proposals. General Chou indicated that the two proposals of the 
Generalissimo were from the Communist viewpoint unacceptable con- 
ditions. One of them, he said, meant that the Communist Party could 
not exercise the veto power to prevent revision of the PCC resolutions 
and the other proposal meant that, while the Communist troop loca- 
tions would be fixed, the Government armies would be free to move. 
General Chou concluded that it was the view of the Communist Party 
that only a lasting truce would demonstrate that the Government did 
not desire a “total split.” He then presented to General Marshall a 
three-point military and eight-point political proposal which, he said, 
represented the Communist stand on military and political issues. 
The military proposal required that all troops resume the positions 
held in China proper as of January 13 and in Manchuria as of June 7, 
that the location of all troops until the time of army reorganization 
should be fixed and that Government troops moved after January 13 
should be returned to their original locations. The political proposal 
consisted of detailed points for discussion by the Five-Man Committee 
and the PCC Steering Committee, which all were related to the PCC 

General Marshall emphasized to General Chou that the Generalis- 
simo had not planned the truce for the purpose of gaining time for the 
movement of troops and munitions, and concluded that after hearing 
the views of General Chou it would seem that his mediation efforts 
were futile and there was no practical basis for further action on his 
part. General Marshall reminded him that some time ago he had indi- 
cated that if the Communist Party did not trust his impartiality as 
mediator it had merely to say so and he would withdraw. General 
Chou said that he would make a written reply to the Generalissimo, 
and that, although he had not welcomed the joint statement issued by 
Ambassador Stuart and General Marshall, he wished to make clear 
that he did not cast any reflection on General Marshall’s actions 
throughout the entire period of mediation. 

On October 9 General Chou En-lai replied to the Generalissimo’s 
memorandum of October 2 and the Kalgan truce proposal in a memo- 
randum addressed to General Marshall. 44 This memorandum con- 

44 See annex 102. 



eluded that the Government should cease its attack on Kalgan and 
that if the Government should permanently call off such an attack, 
the Communist Party was willing to participate in meetings of the 
Committee of Three and the Five-Man Committee or the PCC Steer- 
ing Committee to have simultaneous discussions of (1) the cessation 
of hostilities and (2) the implementation of the PCC resolutions. 
The memorandum also included the military and political proposals 
made by General Chou to General Marshall at Shanghai. 


On October 10, 1946, the anniversary of the founding of the Chinese 
Republic, the Generalissimo made a speech, 45 in which, referring to 
the negotiations, he made statements along the following general 
lines : 

The Government asked the Communist Party to abandon its plot to 
achieve regional domination and distintegration of the country by 
military force and to participate along with all other parties in the 
National Government and the National Assembly. It was the hope 
of the Government that the various political parties and groups would 
submit their lists of candidates to the State Council and of delegates to 
the National Assembly. The Government desired a total and per- 
manent cessation of hostilities, but during the past 3 months the 
Communists had rejected all the proposals of the Generalissimo and 
had also turned down the truce proposal presented by General Mar- 
shall and Dr. Stuart; the Government was not, however, going to 
abandon its policy of a peaceful settlement. It would continue to hope 
and seek for a settlement by mediation and consultation. 


During this period a group of representatives of the Democratic 
League and the China Youth Party proceeded to Shanghai for the 
purpose of inducing General Chou En-lai to return to Nanking. Just 
as it appeared that their efforts would succeed, a series of events oc- 
curred which aroused bitter feeling on the part of the Chinese Com- 
munists and one of which created strong opposition from all minority 
parties. On October 10, Government forces captured Kalgan with 
little or no opposition from Communist troops and on the same day 
occupied Chihfeng, the last Communist stronghold in Jehol Province. 
Government troops at this time were also reported to be on the verge 
of occupying additional Communist-held towns in north Kiangsu. 
On the same day the Government announced the resumption of na- 

See annex 103. 


tionwide conscription, which had been suspended following the J apan- 
ese surrender in August 1945. Even after these events, General Chou 
En-lai was said by Dr. Sun Fo, President of the Legislative Yuan, to 
be ready to return to Nanking, but the issuance by the Government on 
October 11 of a mandate announcing that the National Assembly would 
be convened on November 12, as scheduled, caused General Chou to 
cancel his plans. This announcement also resulted in strong criti- 
cism from the other minority parties, as they considered it evidence of 
unilateral and dictatorial action on the part of the Government. They 
asserted that agreement had been reached on April 24 in discussion be- 
tween representatives of all parties and the Generalissimo for post- 
ponement of the National Assembly, then scheduled for May 5, and 
that it was understood that the date for convening the Assembly 
would be decided by discussion among all parties. The National 
Government explained that its action was in accordance with Kuomin- 
tang regulations, which required formal notification and confirmation 
of the date of the National Assembly one month prior to its convoca- 
tion. The result of this series of events was to cause the cancellation 
of the plans for the return of General Chou and the minority party 
representatives to Nanking. 


The Generalissimo on October 13 indicated to General Marshall and 
Ambassador Stuart that he wished them to consider the possibility of 
his making a statement, such as that previously suggested by General 
Marshall on September 27, but modified in accordance with recent 
changes in the situation. General Marshall, referring to changes in 
the situation, pointed out that the important factor was the immediate 
cessation of hostilities and that, even if the Communists were forced to 
submit to various agreements by the pressure of Government military 
action, there could be no healthy results from political negotiations and 
reorganization of the Government as the bitterness engendered thereby 
would be too deep and the spirit of revenge and distrust too great. The 
Generalissimo replied that he could not agree to an unconditional cessa- 
tion of hostilities without some evidence for the people and the Govern- 
ment leaders that some advantage had been gained for the reorganiza- 
tion of the Government. He mentioned the submission by the Com- 
munists of their list of delegates to the National Assembly as an 

General Marshall reminded the Generalissimo that in early July 
the latter had said that it was first necessary to deal harshly with the 
Communists and later, after 2 or 3 months, to adopt a generous attitude. 
It seemed to General Marshall that after more than 3 months with the 



Government in possession of all the important strategic points, that 
the time had come for the generous attitude of which he had spoken. 
The Generalissimo agreed to this but repeated his previous statement 
regarding the necessity of obtaining certain advantages prior to the 
cessation of hostilities. 

Pursuant to the Generalissimo’s suggestion, General Marshall and 
Dr. Stuart drew up and forwarded to the Generalissimo a draft of a 
statement for release by him, including therein the demand by the 
Generalissimo for submission of the names of the Communist delegates 
to the National Assembly. This draft statement, based upon the pre- 
vious draft presented to the Generalissimo by General Marshall on 
September 27, contained the following points : 46 

The Five-Man Committee and the Committee of Three to hold simul- 
taneous meetings immediately with the following understandings : 

The various agreements tentatively reached by the Committee of 
Three during the June negotiations to be put into effect and the tenta- 
tive agreement reached at the same time for the redisposition of troops 
in Manchuria to be confirmed. 

Government troops north of the Yangtze River to continue in occu- 
pation of places now under their control until the Committee of Three 
reached agreement for the redistribution, reorganization and demobili- 
zation of the armed forces. 

The PCC Steering Committee to confirm without delay any under- 
standing reached by the Five-Man Committee. 

Questions of local government to be settled by the newly organized 
State Council. 

The Constitutional Reviewing Committee to be reconvened imme- 
diately and the agreed draft to be submitted to the National Assembly 
as the basis for its action. 

Concurrent with the cessation of hostilities, which was to be effected 
immediately following the Communist Party’s agreement to the fore- 
going procedure, the Communist Party to announce its intention of 
participating in the National Assembly by publishing the list of its 
delegates thereto. 


On October 16 the Generalissimo made a public statement 47 in which 
he announced the Government’s views and presented an eight-point 
proposal, upon acceptance of which by the Chinese Communist Party 
the National Government was prepared to arrange for the immediate 
cessation of hostilities. The Generalissimo referred to his public state- 

46 See annex 104 for full text. 

47 See annex 105. 


ment on October 10, in which he had said “the Government has always 
adhered to the political solution of our domestic political problem 
and would not give up this policy of peaceful settlement under what- 
ever circumstances,” and continued that, despite the recent Communist 
rejection of Government proposals, the Government would not aban- 
don its policy of “peaceful settlement” and would still seek a settlement 
by mediation and consultation. The Generalissimo’s eight-point pro- 
posal was very similar to the proposals set forth in the draft statement 
prepared by General Marshall and Dr. Stuart, the chief difference 
being (1) the deletion of the point regarding the separation of oppos- 
ing troops in close contact upon which tentative agreement had been 
reached in June and (2) the exclusion of Manchuria from the pro- 
posal providing for the settlement of the question of local government 
by the State Council. One point required that the tentative agreement 
reached for the redisposition of troops in Manchuria be carried out in 
accordance with a fixed schedule without delay while the draft state- 
ment had provided only that this tentative agreement was to be con- 
firmed. The proposals by the Generalissimo were also forwarded to 
General Marshall for transmission to the Chinese Communist repre- 
sentatives on October 17. 

Despite the similarity of the Generalissimo’s eight-point proposal 
to the draft statement submitted to him on September 27 by General 
Marshall, the lapse of time and the military events intervening, such as 
the occupation of Kalgan and the opening of a Government attack on 
Antung and Chefoo at the time of the announcement of this eight-point 
proposal, largely nullified most of the possibilities for good results. 


The initial Communist reaction to the Generalissimo’s eight-point 
proposal was unfavorable, as indicated by General Chou En-lai at 
Shanghai to a group of minority party leaders and by a Communist 
radio broadcast from Yenan. The Third Party Group (minority 
party leaders) were endeavoring to persuade General Chou to return 
to Nanking from Shanghai and three high-ranking National Govern- 
ment officials had also gone to Shanghai to confer with General Chou. 
General Marshall was of the opinion that the American mediators 
should stand aside at this time and encourage Chinese efforts to reach 
a settlement, with the Third Party Group in the position of the middle- 
man. On October 20 General Chou En-lai and the members of the 
Third Party Group decided to return to Nanking on the following 
day. Apparently no new understanding had been reached, but the 
spirit of the conferences in Shanghai appeared to have offered the 
possibility of continued negotiations. 



In early October the Generalissimo had informed General Marshall 
of his plans to proceed to Formosa for a brief visit on October 20. 
When, however, it was learned that General Chou En-lai and the 
Third Party Group had decided to return to Nanking, the General- 
issimo remained in Nanking until their arrival and had a brief talk 
with them before departing for Formosa on the same day. Prior to 
his departure, he informed General Marshall that he would be absent 
for only a few days and that he would return at any moment if his 
presence in Nanking were desirable in connection with the negotiations. 

During this period fighting continued in various parts of North 
China, although the situation remained relatively quiet in Manchuria 
except for small-scale actions and Communist disruption of lines of 
communication. Communist actions along the Peiping-Hankow 
Railway line, intermingled with general fighting in the southern 
Hopei area crossed by this line, were reportedly devoted largely to 
the destruction of the rail lines. Government forces were apparently 
centering their attention on coal mining areas and they occupied two 
important coal mining centers during this period. Other high lights 
of this period were the Communist-organized mass demonstrations in 
Harbin and Tsitsihar in northern Manchuria directed toward the 
withdrawal of American troops from China and criticism of Ameri- 
can interference in internal Chinese affairs. Further indications of a 
deterioration in the situation were seen in the gradual evacuation of 
Communist Party personnel from Nanking, Shanghai and Chung- 
king to Yenan in United States Army planes furnished at the request 
of the Communist delegation in Nanking. 

There still remained, however, some basis for hope in the situation 
in that General Chou En-lai had finally returned to Nanking from 
Shanghai and in that the Third Party Group, whose chief weapon in 
the discussions both with the Government and the Communists was the 
question of participation or nonparticipation in the National Assem- 
bly, was actively engaged in the mediation effort. This enabled the 
American mediators to remain in the background. 

On October 24, General Chou En-lai informed Ambassador Stuart 
that the Chinese Communists could not accept the Government eight- 
point proposal. 


In the meantime military activity showed no signs of abating. Gov- 
ernment forces occupied the last of the main stations on the Tsinan- 
Tsingtao Railway and Government forces were moving north along 
the Peiping-Hankow Railway in southern Hopei. Most serious was 
the opening of a Government drive on Antung in Manchuria, from 


which the Generalissimo was now insisting that the Communists with- 
draw within 15 days after the issuance of a cease-fire order. Commu- 
nist propaganda attacks on the United States continued, demanding 
the immediate withdrawal of all American troops and of American 
support from the National Government. Further indications of the 
deterioration in the situation were seen in the reduction of Communist 
personnel at the Executive Headquarters at Peiping to the point that 
the Communist branch was practically inoperative. The Communists 
had also withdrawn their members from all field teams in Govern- 
ment-occupied areas in China proper except at four points. 


In a discussion of the situation with General Marshall on October 26, 
General Chou En-lai said that if the Government military advances 
continued there would be no necessity for continued negotiations and 
the Committee of Three should take action in this matter. Further 
questioning revealed that General Chou did not consider a meeting 
of the Committee of Three the issue, although he did not object in any 
way to such a meeting. This conversation revealed the extent to 
which his altitude was governed by the deep suspicion of any terms 
presented by the National Government, even when it was pointed out 
to him that certain of the National Government’s eight points repre* 
sen ted terms desired by the Communists on which the National Gov- 
ernment had not previously agreed. General Marshall pointed out to 
him that the distrust was so great on both sides that there was all the 
more need to find some method on which both could agree for the 
termination of the hostilities. 

He continued that the situation presented an almost impossible 
prospect for agreement unless divested of every detail not vital to either 
party and that it was hoped that the Third Party Group might be 
able to find some basis for compromise, a course infinitely better than 
a mediation procedure by Americans since it would then be a settle- 
ment by the Chinese themselves. 

General Chou indicated that if the Third Party Group could pro- 
duce a compromise proposal with a sound basis he would discuss it 
with them, but that, in view of the military situation and Government 
attacks in various areas, there would be no basis for any negotiations 
if this situation continued. In that event, he said, his presence in 
Nanking would be useless. 

General Marshall pointed out that he and Dr. Stuart had tried 
every possible means of stopping the hostilities without success — 
their proposal for the Five-Man Committee, to which the Government 
finally agreed but to which General Chou would not agree; the 



Kalgan truce proposal, which General Chou had characterized as 
capitulation; and now another somewhat similar situation in which 
it was hoped that hostilities could be ended through the efforts of 
the Third Party Group. 

The continued absence of the Generalissimo from Nanking, to- 
gether with the open resumption of the Government military cam- 
paign in Manchuria, was detrimental to the whole situation. The 
Third Party Group was becoming discouraged since its three-point 
proposal 48 for a settlement of the differences had been rejected by the 
Generalissimo, who had told them that they should have adopted his 
eight-point proposal of October 16. General Chou En-lai had un- 
officially accepted practically all of this proposal, but the news of the 
Government capture of Antung caused him to say that he must await 
instructions from Yenan. The Third Party Group then recom- 
mended that there be an informal discussion by National Government, 
Communist, and Third Party Group representatives. The General- 
issimo agreed but insisted that his eight-point proposal constitute 
the agenda. General Chou En-lai agreed and the meeting was 
scheduled for November 4. 

On October 28 in a discussion of the situation with the Generalis- 
simo, General Marshall described the deep seated distrust the Com- 
munist Party had of the motives of the Generalissimo and the Ivuo- 
mintang leaders, to which had been added their distrust of the 
American mediators. He pointed out that the Communists had no 
intention of surrendering and that, while they had lost cities, they 
had not lost armies, nor was it likely that they would lose their armies 
since they had no intention of making a stand or fighting to a finish 
at any place. He continued that the Generalissimo might be able 
to take Harbin but that the Government would then be in for endless 

The Generalissimo replied that the time had come to halt the fight- 
ing but he did not wish this to be conveyed to the Third Party Group. 
General Marshall then explained that this group appeared to be the 
only hope in the situation and urged the Generalissimo to show them 
every consideration and build up their prestige by making concessions 
and encouraging them to speak frankly to him. He further pointed 
out that they had become so discouraged by the failure of their efforts 
that they had expressed the desire to withdraw from the negotiations 
and return to Shanghai. 

On October 30 the Generalissimo informed Ambassador Stuart 
that he was willing to make two additional concessions : 

48 See annex 106. 



(1) The cease-fire order would apply to Manchuria as well as to 
China proper. Military redispositions would follow the June settle- 
ment and local administration would be dealt with uniformly in all 

of China. 

(2) Cities and hsien along the Changchun Railway trunk line, 
except for those already under occupation by the Government, would 
not be taken over before the reorganization of the Government. 

The arguments of the Communist Party at this time were not con- 
sistent. They had insisted that the Government military leaders were 
determined to settle the issues by force, yet the Communists were ap- 
parently risking the continuation and expansion of the fighting in the 
hope that the Government would make concessions in order to obtain 
the list of Communist delegates to the National Assembly. Further- 
more, the issues of the State Council and local government were not 
now at this stage as difficult to solve as they had been in June and it 
seemed that the principal outstanding issue was the reorganization of 
the Executive Yuan. The Communists and the Democratic League 
seemed to attach great importance to this issue as a condition precedent 
to the convening of the National Assembly. In view of the discourage- 
ment of the Third Party Group, the problem was to make this Group 
aware of the fact that the military settlement was greatly affected by 
political issues and that the members of the Group should stand to- 
gether and remain strong under the pressure of the Government and 
the Communist Party to divide them. The Government continued to 
be unwilling to agree to the cessation of hostilities until the Commu- 
nists submitted a list of their delegates to the National Assembly and 
the Communists were willing to submit such a list only to a reorganized 
Government, which to them meant the reorganization of the Executive 
Yuan. The Generalissimo had indicated that he would not reorganize 
the Executive Yuan until after the meeting of the National Assembly. 

Several developments at this time had a bearing on the negotiations. 
General Chou En-lai had agreed to return to Nanking from Shanghai 
only if the Third Party Group would stand with the Communist Party 
in refusing to nominate delegates to the National Assembly until the 
Government had been reorganized in strict accordance with the PCC 
resolutions. This was proving very embarrassing to the Third Party 
Group. The Group were urging General Marshall and Dr. Stuart to 
take the lead again in the negotiations, but the American mediators 
declined to do so because it was very important that, if possible, a 
Chinese neutral group act in mediation, at least on political questions. 

Although the National Government had agreed to participate in 
an informal discussion of the various issues with the Communists and 
the Third Party Group, the Government representatives did not 



attend the meeting on November 4 and the Third Party Group 
merely asked General Chou to state the Communist demands. This 
he did very completely, covering every issue. 

On November 5 the Generalissimo informed General Marshall and 
Ambassador Stuart that the absence of the Government members from 
the meeting previously agreed to had resulted from a number of indi- 
cations that the Communists wished to eliminate American mediation. 
General Marshall expressed regret that the failure of the National 
Government to participate in the meeting was due to this reason and 
stated that the Communist Party either accepted the American media- 
tors or did not — they either trusted the American mediators or did not 
trust them and Government action could not force a decision in this 
particular manner. The Generalissimo then said that the time had 
come to stop the fighting and that he was prepared for an unconditional 
termination of hostilities. He expressed a desire to have General 
Marshall and Ambassador Stuart advise him with respect to the 
announcement of the cessation of hostilities, together with a reference 
to the convening of the National Assembly, which he hoped the 
minority parties would attend. 


General Marshall and Dr. Stuart, therefore, prepared a draft state- 
ment which represented the views of the Generalissimo regarding the 
termination of hostilities and met the issues which were certain to be 
raised by the minority parties regarding conditions under which the 
National Assembly would meet and adopt a constitution. (At the 
request of the Generalissimo, General Marshall had frequently, during 
the negotiations, prepared for his consideration and possible use drafts 
of statements or of proposals which might be introduced into the 
discussions. In so doing, General Marshall had acted as a staff officer 
might on behalf of the Generalissimo in drawing up documents 
containing the latter’s views.) Meanwhile, they received a draft of a 
statement prepared by the Generalissimo which they believed would 
further complicate the situation since it was highly provocative, 
lengthy, argumentative and difficult to understand. Furthermore it 
would not terminate the fighting in a way that promised more than 
a threat of future use of force. 

On November 7 General Marshall and Dr. Stuart met with the Gen- 
eralissimo at the latter’s request and presented to him a Chinese trans- 
lation of their draft. 49 They expressed the opinion that his draft 
statement would merely aggravate the situation in China. The Gen- 

49 See annex 107. 


eralissimo then explained that in preparing the draft he had had to 
take into consideration a number of important points : 

(1) While there had previously been a divided opinion in the Gov- 
ernment regarding the proper course to be followed, there was at this 
time a complete unanimity of opinion that a policy of force was the 
only course to follow. 

(2) He must give careful consideration in the organization of the 
National Assembly to the delegates who had been legally elected in 
1936 and were now assembled in Nanking and not emphasize the 
dominant importance of the PCC resolutions in contrast to the 1936 
draft constitution. 

(3) He must also give careful consideration to the morale of the 
Army, considering the losses that had been recently sustained, if they 
were to be greeted by the announcement of an unconditional cessa- 
tion of hostilities which amounted to the virtual unconditional sur- 
render of the National Government’s position and contentions. 

The Generalissimo continued that he could not support the state- 
ment in the draft prepared by General Marshall and Dr. Stuart re- 
garding an unconditional termination of hostilities before his military 
and political leaders and further explained that he stood practically 
alone in the belief that matters could be settled by peaceful negotiations 
and the fighting stopped. The Generalissimo then asked General 
Marshall and Dr. Stuart to reconsider their draft in the light of his 
statements and advise him accordingly. General Marshall replied 
that he would need an opportunity to consider with Dr. Stuart the 
points of view expressed by the Generalissimo as he was seriously 
concerned whether he should participate, as a representative of the 
United States Government, in the preparation of a paper in accord- 
ance with the points of view he had indicated, which were contrary 
to the views of General Marshall and those, he thought, of the United 
States Government. 

In submitting a redraft of the statement to the Generalissimo on 
November 8, General Marshall stated that it should be clearly under- 
stood that the redraft did not have his approval as a representative of 
the United States Government. He continued that he had merely 
endeavored to help the Generalissimo as staff officers might assist him 
in drafting his views in the least provocative manner but that the 
redraft did not have his approval since he was in almost complete dis- 
agreement with the attitude of the Government military leaders. 

The statement issued by the Generalissimo on November 8 was modi- 
fied, but the method proposed for stopping the fighting was incon- 
clusive and still held, in effect, a threat of renewed battle to force a 



political decision. 49 * 1 The statement expressed hope that the State 
Council would be reorganized while the final redraft prepared by Gen- 
eral Marshall and Dr. Stuart had indicated that it should be reorgan- 
ized in order to carry out its functions for the reorganization of the 
Government in accordance with the PCC resolutions. This would in- 
clude the reorganization of the Executive Yuan, but the Generalis- 
simo’s statement merely said that such a reorganization would not take 
place prior to the meeting of the National Assembly and made no 
mention of the PCC resolutions. As a result of a meeting between 
General Chou En-lai and the Third Party Group, the former, under 
date of November 8, forwarded to General Marshall a letter 50 which, 
in effect, constituted a reply to the eight-point proposal of the Gen- 
eralissimo. The letter was noncommittal and referred only casually 
to the eight points, but it did hold open the door for continued negotia- 
tions and peace. General Marshall transmitted a copy of this letter to 
the National Government on the same day. 


During the period preceding the announcement by the Generalis- 
simo of his issuance of a cease-fire order to Government troops, there 
had been no improvement in the military picture. Fighting continued 
in North China and the Government forces occupied Tunghua in Man- 
churia, which had been one of the cities from which the Government 
had demanded the withdrawal of Communist forces at the time of 
the Generalissimo’s absence in Formosa. Another factor of consider- 
able importance in the situation was the decreased effectiveness of the 
Executive Headquarters as a result of the vicious Communist propa- 
ganda attacks on the Americans and the anti-American demonstra- 
tions and campaigns staged in Communist-held areas. 

The issuance by the Generalissimo of a cease-fire order set the 
stage, however, for the convening of the National Assembly against a 
background of peace. The Government approach to the National 
Assembly was not, however, sufficiently in accordance with the PCC 
resolutions and meant that, if all the delegates appeared, the 
Kuomintang would have an overwhelming majority, and a simple 
majority vote could determine the character of the constitution with- 
out much consideration of the fundamental guarantees agreed to in 
the PCC. The Government had been unwilling to agree to any tem- 
porary adjournment after the formal convocation, as proposed by 
General Marshall and Dr. Stuart, and had passed up an excellent 

40a See annex 108. 
60 See annex 109. 


opportunity of capitalizing in a conciliatory manner on the proposal 
to stop the fighting. 


On November 10 the National Government requested a meeting of 
the Committee of Three. In view of the failure to reach any agree- 
ment regarding the National Assembly, General Chou En-lai was 
reluctant to attend the meeting but finally agreed to an informal 
meeting which was held on November 11. 

General Chou En-lai stated that it appeared futile to proceed with 
arrangements for the termination of hostilities when unilateral action 
of the Government in convening the National Assembly contrary to 
the PCC resolutions meant a definite “split” in China. After the 
Government representative presented its proposal in detail, General 
Chou finally agreed to transmit the proposal to ^enan for prompt 
reply and indicated that he would study the matter and proceed on 
the basis that whatever the political impasse at this time, he would 
join in working for an agreement for the formal termination of 

Meanwhile an informal meeting of the PCC Steering Committee 
was held, the first since April 24, at which the Communist Party 
requested a postponement of the National Assembly until the end of 
November. This request was transmitted to the Generalissimo by a 
prominent nonparty member of the Third Party Group. 

The PCC Steering Committee also practically reached agreement 
on the composition of the State Council and the Committee appeared 
to have agreed that the reorganization of the Executive Yuan should 
be planned for prior to the National Assembly but not announced until 
after the adjournment of the Assembly. At this point the Govern- 
ment stopped the meetings of the Committee, but an informal meeting 
was held on November 12 which may have had some connection with 
the decision by the Generalissimo on November 11 to delay the conven- 
ing of the National Assembly for three days. He informed Dr. Stuart 
that at the urgent request of the non-party delegates he had agreed to 
this postponement and that they had promised that, if such a delay 
were granted, the Third Party Group would submit their lists of 
delegates and possibly the Communist Party would also do so. The 
Communist Party informed the Government, however, on November 
12 that it would not participate in nor did it approve of the National 
Assembly since it had been convened and also postponed unilaterally 
by the Kuomintang. 

The National Assembly was formally convened on November 15 
with a decidedly limited representation from non-Kuomintang groups. 



The names of additional delegates from non-party and Youth Party 
personnel were submitted on the night of November 15, but the Com- 
munist Party and the Democratic League were not represented. The 
postponement for 3 days had resulted in the promise of attendance by 
some of the Third Party Group, but it had had the effect of disrupting 
the unity of action of that Group and had seriously, if not fatally, 
weakened their influence for good as a balance between the two major 

The address of the Generalissimo at the opening of the Assembly 
was mild in tone and was devoted chiefly to the achievements and 
objectives of the National Government. 51 General Chou En-lai, how- 
ever, on November 16 issued a statement to the press regarding the 
National Assembly, in which he was strongly critical of the Kuomin- 
tang, charged that its action in convening the Assembly was contrary 
to the PCC resolutions, and gave notice that the Communist Party did 
not recognize the Assembly. He also stated that the door of negotia- 
tions had been “slammed” by the Kuomintang authorities. 52 


General Chou En-lai called on General Marshall on November 16 
and asked for transportation for himself and other Communist rep- 
resentatives to Yenan during the following week. He indicated that 
he was leaving some members of the Communist delegation at Nanking 
and that he expected to study the situation with the Communist leaders 
at Yenan. He expressed the wish that the Executive Headquarters be 
continued for the time being even though there was little it could do. 
He expressed fear that the National Government would undertake 
offensive operations against Yenan and said that if this occurred it 
would mean the end of all hope for a negotiated peace. He also asked 
that transportation be provided for Communist personnel in the Ex- 
ecutive Headquarters in Peiping and Changchun and in Nanking and 
Shanghai to evacuate them to points of safety. General Marshall 
stated that American planes would be provided for the purposes re- 
quested by General Chou and added that, while he had had no infor- 
mation of National Government plans for an attack on Yenan, he 
would deplore such action and oppose it strongly. He also said that 
if such an attack occurred he would consider that it terminated his 

In conclusion, General Marshall asked General Chou En-lai to take 
up with the Communist leaders the question of his continued media- 
tion. He said that it was useless for him to endeavor to mediate if he 

81 See annex 110. 

82 See annex 111, 


were not trusted as being sincere in an effort to be impartial and that 
under such circumstances it would be useless for him to remain in 
China. General Marshall stated that he wished General Chou to 
determine formally from the Communist leaders at Yenan whether 
specifically they wished him to continue in his mediation role and asked 
that the matter be viewed as a plain business proposition without re- 
gard to Chinese considerations of “face” since he was not interested 
in “face.” He explained that his sole interest was the question of 
whether he could render some service to China by way of mediation. 
General Chou stated that he sympathized with the request by General 
Marshall and that he would place the question before the appropriate 
Communist authorities at Yenan. 

General Chou En-lai departed for Yenan on November 19 in a 
United States Army plane. His departure brought to an end the 
long period of negotiations and discussions begun in January 1946. 
The door had not been closed to further negotiation by either side, 
but it seemed likely that a fredi start would have to be made before 
there would be any possibility of bringing about an understanding be- 
tween the two parties. The attitude of the Communist Party and the 
Democratic League indicated their belief that the PCC resolutions 
had been totally destroyed and that it would be necessary to con- 
vene another conference of all parties similar to that held in January. 

It seemed apparent to General Marshall that the Government mili- 
tary leaders were in the saddle and were thoroughly convinced that the 
Communists would not carry out any agreement reached. The strong 
political clique in the Kuomintang was firmly convinced that the Com- 
munists would merely disrupt any government in which they partici- 
pated. With these two forces working together and the Communist 
repulse of every overture General Marshall and Dr. Stuart had per- 
suaded the Government to make, the existing tragic situation had 
developed. It seemed to General Marshall that the Government 
had been using the negotiations largely for its own purposes. Follow- 
ing the breakdown of the negotiations in June, the Government had 
been waging war on a constantly increasing scale, heavily absorbing 
Government funds. These military expenditures, which were con- 
suming about 70 percent of the total Government budget, served to in- 
crease inflation at the same time the Chinese Government was asking 
the United States for large loans. 

The expanded currency continued to go into commodity speculation 
and hoarding on an increasing scale, and wholesale prices had risen 
about seven times during the year. In an abortive effort to combat in- 
flation by absorbing currency from circulation, the Government 



engaged in heavy sales of gold taken from its reserves. In addition, 
despite the very considerable imports that were made available 
through Unrra and other foreign aid measures, the Government’s 
foreign exchange reserves were drawn on to procure imports for which 
the depressed level of exports and inward remittances had failed to 
provide the necessary means of payment. At the end of 1946, official 
Chinese reserves of gold and United States dollars had been depleted 
by approximately 450 million dollars, or about 50 percent. 

On the other side, the Communist Party had, in General Marshall’s 
opinion, defeated itself through its own suspicions, refusing to agree 
to possible procedures which might well have resulted in a settlement 
of the issues. This had been particularly true of its rejection of the 
proposal for the Five-Man Committee under Ambassador Stuart, 
which might have led to organization of the State Council and the 
carrying out of the other PCC agreements, and of its almost con- 
temptuous rejection of the Kalgan truce proposal. It had miscon- 
strued each overture arranged by General Marshall and Dr. Stuart 
and had apparently been convinced by its own campaign of public 
misrepresentation of American intentions and actions. It also chose 
to ignore in discussion and in criticisms of Government actions its 
own military and other actions that were violations of agreements. 

At this time a high-ranking Government official was urging upon 
General Marshall the need for American financial assistance to meet 
the serious economic situation. General Marshall was very emphatic 
in stating to him that it was useless to expect the United States to 
pour money into the vacuum being created by the Government military 
leaders in their determination to settle matters by force and that it 
was also useless to expect the United States to pour money into a 
Government dominated by a completely reactionary clique bent on 
exclusive control of governmental power. 

Another ranking Government official approached General Marshall 
at this time in regard to action taken by the Export-Import Bank to 
reject General Marshall’s recommendation, approved by the Depart- 
ment of State, for the extension of loans for the Canton-Hankow 
Railway and for the Yellow River bridge in north Honan. General 
Marshall explained that the Bank had given as the reason for this 
action that there was not sufficient prospect of amortization to justify 
the loans. When the Government official said that he did not under- 
stand why the loans had been rejected since they had nothing to do 
with the Government military campaign, General Marshall pointed 
out that it was the open corruption of the Government as well as its 
military policy which entered into consideration. 



On December 1 General Marshall held a long conference with the 
Generalissimo, which revealed the wide divergence of their views on 
what course should be followed to reach a peaceful settlement in China. 
General Marshall pointed out that in his opinion the complete distrust 
of the National Government in the good intentions of the Communist 
Party during the past spring had been replaced by an overwhelming 
distrust on the part of the Communists of the good intent of any 
proposal advanced by the Government toward a peaceful settlement 
of the differences. In the recent negotiations, General Marshall and 
Ambassador Stuart had found it impossible to convince the Commun- 
ists of the good intentions of the Government or even of the integrity 
of action of the American mediators. It was General Marshall’s view 
that even the most tolerant approaches of the National Government, no- 
tably that represented by the Generalissimo’s eight-point proposal of 
October 16, had been neutralized by military action — in this particular 
case an attack on Antung and Chefoo at the time of the announcement 
of this proposal. In regard to the economic situation General Marshall 
pointed out that military expenditures were reported to be consuming 
about 70 percent of the National Government’s budget, thus creating a 
vacuum in Government assets in order to support extensive military 
efforts at the same time that he was being pressed to recommend vari- 
ous loans by the United States Government. He informed the Gen- 
eralissimo that in the event of a financial collapse the Kuomintang 
would be imperiled and a fertile field would be created for the spread 
of communism. General Marshall observed that the National Govern- 
ment’s military commanders in the field were wholly unaccustomed to 
any consideration of financial restrictions. He said that the Commun- 
ists were aware of the approaching crisis and that this entered into 
their calculations in forming plans. Directly opposed to this economic 
problem was the view of the National Government military leaders 
that the issues could be settled by force. General Marshall said that 
he not only disagreed with this view from a military standpoint but 
also felt that before sufficient time could elapse to prove the accuracy 
of such a view there would be a complete economic collapse. He 
pointed out that the inability of the National Government to keep open 
the railway between Tientsin and Chinhuangtao since the withdrawal 
of the United States Marines in September was one example; another 
was the fact that sections of Hopei Province, presumably reoccupied 
by the National Government forces, were still dotted throughout with 
Communist headquarters. General Marshall summed up the situation 
with the statement that the Communists were too large a military and 



civil force to be ignored and that, even if one disregarded the brutality 
of the inevitable procedure necessary to destroy them, they probably 
could not be eliminated by military campaigning. He believed, there- 
fore, that it was imperative that efforts be made to bring them into the 
Government and that the greatest care should be taken to avoid hav- 
ing military action disrupt the procedure of negotiations. 

The Generalissimo said that he was firmly convinced that the Com- 
munists never intended to cooperate with the National Government 
and that, acting under Russian influence, their purpose was to disrupt 
the National Government. He felt that it was necessary to destroy the 
Communist military forces and believed that if this were done there 
would be no difficulty in handling the Communist question. He went 
on to say that the situation was different from that existing during 
early campaigns against the Communist forces in that roads were 
available this time to permit freedom of military movement; he felt 
confident, therefore, that the Communist forces could t>e exterminated 
in from 8 to 10 months. The Generalissimo, referring to the economic 
situation, said that, while it was more serious in the cities, the Chinese 
economy was based largely on the agrarian population and there was 
no danger for a long time of an economic collapse. 83 

At this point General Marshall briefly, but firmly, restated his view 
that this large Communist group could not be ignored and that the 
National Government was not capable of destroying it before the 
country would be faced with a complete economic collapse. General 
Marshall did not discuss what was to him of vital concern : the possi- 
bility of a collapse of the Kuomintang and the evident growing dis- 
approval of the character of the local government, or misgovernment, 
that the Kuomintang was giving the country. 

Under date of December 4 the Communist representative at Nan- 
king forwarded to General Marshall a message from General Chou 
En-lai at Yenan setting forth, for transmission to the Generalissimo, 
the Communists’ terms for reopening negotiations: 54 (1) the disso- 
lution of the National Assembly and (2) the restoration of troop 
positions held as of January 13 in accordance with the cessation of 
hostilities agreement. General Marshall forwarded a copy of this 
message without comment to the National Government. General 
Chou En-lai’s message made no reply to General Marshall’s request 
for an indication by the Communist Party of its attitude toward his 
mediation efforts and posed conditions which the National Govern- 
ment obviously could not be expected to accept. It appeared that the 
Communist Party had, in effect, rejected American mediation. 

03 See below, pp. 220-229. 

M See annex 112. 


The Generalissimo had in early December indicated the Chinese 
Government’s desire to obtain General Marshall’s services as an ad- 
viser. General Marshall had declined the offer since he believed it 
unreasonable to expect that his services as adviser to the National 
Government could materially promote a beneficial reaction within the 
Government when as a mediator with full backing from the United 
States Government he had been unable to influence the Chinese Gov- 
ernment. General Marshall was struggling with two problems — the 
power of the reactionaries in the Government and the difficulty of 
dealing with the Communist Party with its immense distrust of the 
Kuomintang. The best defense against communism in his opinion 
was for the existing Government in China to carry out reforms which 
would gain for it the support of the people. He was concerned over 
the destructive influence of the reactionaries in the Government and 
felt that the Generalissimo’s own feelings were so deep and his asso- 
ciations of such long standing that it was most difficult to separate 
him from the reactionary group. He considered that the solution 
called for the building up of the liberals under the Generalissimo 
while at the same time removing the influence of the reactionaries. 
In considering the Generalissimo’s desire for American advice, Gen- 
eral Marshall felt that American advice could be helpful in many 
matters but that corruption within the Government could not be 
eliminated through advice but rather through the existence of an 
effective opposition party. 

He therefore endeavored, in conversations with National Govern- 
ment leaders, to emphasize the importance and necessity of the adop- 
tion by the National Assembly of a constitution in keeping with the 
PCC resolutions, which would be at least an initial step in the direc- 
tion of representative government in China. It was the opinion 
of General Marshall that if this kind of constitution were adopted 
and the State Council reorganized with seats left vacant for the 
Communists and the Democratic League, and if the reorganization of 
the Executive Yuan were then begun, it might be possible to discuss 
with the Communists ways of their coming into the National Assembly. 

In furtherance of the idea of endeavoring to build up a liberal group 
in China to a position of influence, General Marshall took every oppor- 
tunity in conversations with minority and non-party Chinese to em- 
phasize the necessity of the unification of the minority parties and the 
organization of a liberal group which could serve as a balance between 
the two major parties. He pointed out that the liberal Chinese should 
band together in a single liberal patriotic organization devoted to the 
welfare of the people and not to the selfish interests of minority party 
group leaders. They would then be able to exert influence in the 



political situation, an influence which would increase as the group 
gained prestige. Such a group could stand between the Kuomintang 
and the Communist Party and neither of them could normally take a 
decisive step without the support of the liberal party. The minority 
parties, however, had allowed themselves to be divided and were con- 
sequently unable to influence the situation or prevent the use of military 
force by the Government or the promotion of economic collapse by the 
Communists. In the midst of this deplorable situation stood the 
Chinese people alone bearing the full weight of the tragedy. 

In conversations with the Generalissimo at this juncture General 
Marshall noted definite inconsistencies. The Generalissimo said 
that he would do everything he could to bring the Communists 
into the Government by peaceful negotiation, but when discus- 
sing the question of reopening the two main railways in North 
China he said that it was useless to attempt to negotiate with the 
Communists on this question, which would have to be solved by force. 
He also said that if the railways were taken by force, the Commu- 
nists would then be compelled to come to terms. He had taken a sim- 
ilar attitude in June, when he had said that “given time, the ripe 
apple will fall into our laps,” and again in August, when he had said 
that “if hostilities are stopped, there would be no way to force the 
Communists to attend the National Assembly.” 


Following the departure of General Chou En-lai for Yenan and the 
termination of the negotiations, attention was centered chiefly on the 
National Assembly and the question of the type of constitution it 
might adopt. There were early indications that the Kuomintang re- 
actionaries were opposed to the adoption of a constitution along the 
lines of the PCC resolutions and that they were endeavoring to obtain 
approval of the May 5, 1936 constitution in substantially unchanged 
form. These circumstances required that the Generalissimo take a 
strong stand if the constitution to be adopted were to be in general 
accord with the PCC resolutions. 

The Generalissimo did exercise a determined personal leadership, 
assisted by almost all other groups and individuals in the Assembly, 
in opposing the extreme right-wing clique. The Assembly adjourned 
on December 25 with the Generalissimo in full and confident control of 
the situation, having demonstrated his ability to override the Kuo- 
mintang reactionaries and having restored his prestige through his 
action in securing the adoption of a constitution of a democratic 
character in reasonable accord with the PCC resolutions. 


While the new constitution was on its face a democratic document, 
General Marshall was concerned with the degree and manner of its 
enforcement. The passage of the constitution was only the beginning 
and the only guarantee of an honest reorganization of the Government 
and a genuine enforcement of the constitution lay in the development 
of a truly liberal group in China. General Marshall feared that if the 
minority and non-party liberal groups continued to operate individu- 
ally, the reorganization of the Government might be a synthetic one. 
He continued, therefore, to emphasize the importance of the organiza- 
tion of the Chinese liberals into an effective force, which would have 
as its objective the support of whatever appeared to be a good govern- 


The Chinese Communist Party was apparently adamant in re- 
fusing to recognize the National Assembly and the new con- 
stitution and on demanding the acceptance of its two conditions as 
prerequisites to further negotiation. Communist propaganda attacks 
on the United States grew stronger during this period and Communist 
spokesmen indicated the probable Communist strategy — the use of 
constant harassing tactics on Kuomintang weak points to prevent the 
reopening of lines of communication and the refusal of further nego- 
tiation until the Government had become weakened by economic deteri- 
oration. The Communists still had made no reply to General 
Marshall’s inquiry regarding his mediation role. 

Although there appeared to be slight prospect for the renewal of 
negotiations, General Marshall and Ambassador Stuart, pursuant to 
the Generalissimo’s request, suggested that definite proposals be pre- 
sented to the Communist Party without any attendant publicity. 
They indicated that, with the adoption of a sound constitution, if the 
Government proceeded with the establishment of the State Council 
and began a genuine reorganization of the Executive Yuan, the Gen- 
eralissimo might send a few representatives of importance and liberal 
standing to Yenan to discuss with the Communists the question of 
reopening negotiations for the cessation of hostilities and Communist 
participation in the reorganization of the Government. However, 
before the good faith of the Government had been at least partially 
established by the adoption of a constitution in accord with the PCC 
resolutions, news of the Government purpose had become known. The 
Communist reaction was unfavorable and there were indications that 
they would resent reorganization of the State Council and the Execu- 
tive Yuan prior to consultation with them, apparently feeling that this 



would close the door on any possibility of responsible participation on 
their part. 

On December 27 General Marshall, in reply to the Generalissimo’s 
request for his comments on the situation, made the following remarks : 
It was unlikely that the Communists would commit themselves to an 
agreement at this time due to their overwhelming suspicion that it was 
the Government’s intention to destroy them by military force. The 
Government’s military commanders had erred considerably in their 
optimistic estimate of what they could achieve toward suppression 
of the Communists. They had stated in June that Kiangsu Province 
would be cleared of Communist forces within two months and the 
Province had not yet been cleared. At the same time they had said 
that the Communists could be brought to terms from a military stand- 
point within three months. That had not occurred after six months. 
The Government refusal to terminate hostilities in order to force the 
Communists to participate in the National Assembly had failed of its 
purpose. If the Communists would not renew negotiations, the Gov- 
ernment should go ahead with the reorganization, leaving the door 
open for Communist and Democratic League participation. The 
Generalissimo, by his leadership in the National Assembly in opposing 
the reactionaries and securing the adoption of a reasonably sound 
constitution, had gained a great moral victory which had rehabili- 
tated, if not added to his prestige. It was most important, therefore, 
that he demonstrate at this time that the new constitution was not a 
mere collection of words and that he was determined to institute a 
democratic form of government. He must by his own indirect leader- 
ship father a coalition of the minority groups into a liberal party, 
since, unless such sizable minority groups existed, his efforts in the 
National Assembly to secure a sound constitution would be regarded 
as mere camouflage for an intention to proceed with one-party govern- 
ment. The various minority groups could not of themselves manage 
an amalgamation and such action would require his active assistance. 
He should also call on the minority party leaders to nominate men for 
various posts rather than follow previous practices of neutralizing 
the opposition leaders by bribing them with attractive appointments. 
If he did not take such action, there could be no genuine two-party 
government and his integrity and position would be open to serious 
attack. The organization of the minority parties into a large liberal 
group would assist him greatly and he could place himself in the 
position of the father of his country rather than continue merely as 
the leader of the Kuomintang one-party government. 




General Marshall remained in China during this period in the hope 
that he might be able to use his influence toward the adoption of a 
genuinely democratic constitution. In the past he had often felt that 
the National Government had desired American mediation as a shield 
for its military campaigns and at this time the Communists had no 
desire for further American mediation but feared being placed in an 
unfavorable position if they were to reject formally such mediation. 
He was not willing to allow himself thus to be used by either party, 
nor did he intend to serve as an umpire on the battlefield. He felt 
that his continued usefulness as a negotiator had practically been 
wrecked by the recent Communist rejection of all Government over- 
tures, actions which played directly into the hands of the reactionaries 
in the Government, from whom his chief opposition had always come. 

General Marshall was of the opinion that, if the Communists declined 
to reopen negotiations and repulsed the Government’s overtures, the 
Executive Headquarters should be dismantled. He also believed that 
he should be recalled to give a first-hand report to the President on 
the situation. It was his hope that by issuing a very frank statement 
at the time of his recall he might be able to weaken the power of the 
reactionaries and strengthen the position and influence of the better 
elements, and he believed that the time had come when it was going 
to be necessary for the Chinese themselves to do the things he had 
endeavored to persuade them to do. He hoped, therefore, that by a 
frank statement of Chinese Communist misrepresentations and vicious 
propaganda against the United States he might be able to give some 
guidance to misinformed people both in China and in the United 


On January 6, 1947, the President announced that he had directed 
General Marshall to return to Washington to report in person on the 
situation in China. General Marshall left China en route to the United 
States on January 8, and shortly after his departure the Department 
of State made public the personal full and frank statement referred 
to above. The greatest obstacle to peace in China, the General stated, 
was the almost overwhelming suspicion with which the Kuomintang 
and the Chinese Communists regarded each other. Other important 
factors which he blamed for the breakdown of negotiations included 



the opposition of the dominant group of Kuomintang reactionaries, the 
efforts of the extreme Communists to produce an economic situation 
which would facilitate the overthrow or collapse of the Government, 
and the dominating influence of the military in China. “The salvation 
of the situation,” he reported, “would be the assumption of leadership 
by the liberals in the Government and in the minority parties and suc- 
cessful action on their part under the leadership of the Generalissimo 
would lead to unity through good government.” 65 

In conclusion, General Marshall said that he had spoken very 
frankly because in no other way could he hope to bring to the Amer- 
ican people even a partial understanding of the complex problem and 
that he was expressing his views publicly, as was his duty, to present 
his estimate of the situation and its possibilities to the American people. 

Prior to his departure from China, General Marshall had conver- 
sations with several high-ranking Government officials. He stressed 
the necessity of removing the dominant military clique and the re- 
actionaries from the Government structure. He explained that the 
frank statement he expected to make would arouse bitterness, par- 
ticularly among the radicals, the reactionaries and the irreconcilables. 
He said that he had exerted every effort to create an opportunity for 
the better elements in China to rise to the top, and he hoped that his 
statement would assist in making possible the organization of a pa- 
triotic liberal group under the indirect sponsorship of the General- 
issimo. He continued that he considered such action imperative from 
the standpoint of the Generalissimo since he needed a respectable op- 
position party in order to prove to the world his sincerity in establish- 
ing a democratic form of government in China. General Marshall 
pointed out that such an opposition party would be a strong force for 
good, which the Generalissimo could use to wipe out graft, corrup- 
tion and incompetence in the Government and in the Kuomintang and 
which would provide an effective check on the existing dictatorial 
control of the military leaders. 


Shortly before General Marshall’s recall to Washington, Presi- 
dent Truman on December 18, 1946, after full consultation with his 
Special Representative in China, issued a further statement on China. 
He reaffirmed American policy as laid down in his statement of Decem- 
ber 15, 1945, and reviewed events in China in relation to that policy 
during the intervening year. He restated the American belief that a 
“united and democratic China” was of the utmost importance to world 
peace and that a broadening of the base of the Chinese Government 

See annex 113 for full text. 


to make it representative of the Chinese people would further China’s 
progress toward that goal. He expressed deep regret that China had 
not yet been able to achieve unity by peaceful methods but hoped that 
the Chinese Government would yet find a solution. He characterized 
as still sound the plans for political unification and military reorgan- 
ization agreed upon early in 1946 but never fully implemented. Stat- 
ing that the United States would give careful and sympathetic consid- 
eration to ways and means which were presented for constructive aid 
to China, the President laid down a continued policy of avoiding in- 
volvement in Chinese civil strife and of persevering in a policy of 
“helping the Chinese people to bring about peace and economic re- 
covery in their country.” 66 

The Kuomintang press generally interpreted this statement as an 
endorsement of the National Government’s policy and position while 
the Communist Party radio attacked it as “mainly an apology for 
the United States Government’s reactionary policy toward China 
since March of this year.” 


On January 7, 1947, President Truman announced the nomination 
of General Marshall as Secretary of State. Shortly after General 
Marshall’s assumption of office the decision was reached to terminate 
the connection of the United States with the Committee of Three and to 
withdraw American personnel from Executive Headquarters. 57 This 
action made it possible to withdraw all United States Marines 
from North China, except for a guard contingent at Tsingtao, 
the location of the United States Naval Training Group engaged in 
training Chinese naval personnel. In issuing an announcement re- 
garding the termination of the Executive Headquarters, the National 
Government expressed its appreciation of the American efforts to 
achieve peace and unity in China. 


The termination of the American mediation effort did not change 
the traditional attitude of the United States toward China. That 
effort had failed to bring peace and unity to China. There was a 
point beyond which American mediation could not go. Peace and 
stability in China must, in the final analysis, be achieved by the 
efforts of the Chinese themselves. The United States had endeavored 
to assist in attaining those goals and in the process had been sub- 

86 See annex 114. 

67 See annex 115. 



jected to bitter attack by many groups, both in China and abroad — 
attacks which had, deliberately or otherwise, misrepresented the in- 
tentions and purposes of the United States Government. The issue at 
this point was squarely up to the Chinese themselves. It was General 
Marshall’s opinion that only through the existence of a liberal oppo- 
sition group in China could there be a guarantee of good government 
and of progress toward stability. The future efforts of the Chinese 
themselves would determine whether it was possible to give peace and 
stability to the people of China. It was General Marshall’s belief 
that the United States should continue to view sympathetically the 
problem facing the Chinese and should take any action, without inter- 
vening in China’s internal affairs, that would assist China in realizing 
those aims which represented the hopes and aspirations of the Chinese 
people as well as those of the United States. 



The economic situation in 1946, while not decisive, did influence de- 
velopments; more importantly, it carried serious implications for the 
future and in no small measure indicated National Government capa- 
bilities. The discouraging lack of progress toward a political and 
military settlement in 1946 was matched by a steady deterioration 
of the National Government’s economic position. In contrast to the 
relatively bright situation prevailing on V-J Day, China, 16 months 
later, was gripped by a mounting inflation, its reserves of foreign 
exchange had been partially depleted, and no real beginning had been 
made on the task of internal rehabilitation and economic development. 
Rather, the outbreak of widespread fighting between Nationalist and 
Communist forces had resulted in general damage to mining and 
transportation facilities and in the progressive isolation of mineral 
and agricultural production from centers of consumption and export. 
The nature of the struggle in China made it possible for the Chinese 
Communists to better their relative position by tactics aimed at de- 
struction and economic stagnation, while the National Government 
was faced with the task of attempting to maintain a military front and 
economy extending over vast areas and linked by exposed and lengthy 
lines of communication. These considerations had been in the mind 
of General Marshall when he warned the National Government against 
the consequences of a full-scale civil war. 

One of the important blows to the National Government’s economic 
prospects, however, was not traceable to Chinese actions or, initially, 


to the outbreak of civil strife- After the Japanese surrender, Russian 
occupation forces systematically stripped equipment and parts from 
key plants in the Manchurian industrial complex. As a result, China 
did not acquire a functioning industrial system in Manchuria, but 
rather, a damaged heavy industry, poorly integrated and partially 
inoperable. When Manchuria became the first major area of civil 
fighting, transport disruption became a chronic problem. The few 
railroad lines operating in Nationalist-held areas of Manchuria were 
severely handicapped by shortages of rolling stock and by damaging 
Communist raids. Cities were separated from the areas from which 
they normally obtained their food supplies and fuel. Manchuria 
increasingly became a major economic liability to the National Gov- 

In China proper, the paramount post-war economic problem was 
the continuing inflation. During the war with Japan the Govern- 
ment had financed a large part of its expenditures by the issuance of 
paper currency. The result had been a steady inflation of prices which 
in turn had as one of its consequences the destruction of the savings 
and the economic position of middle class Chinese. The inflationary 
process, far from being arrested in 1946, was accelerated. Wholesale 
prices in Shanghai increased more than seven times during the year. 
The official exchange rate between the Chinese National currency 
dollar and the United States dollar was raised in August from 2,020 to 
1 to 3,350 to 1. By December the open market dollar rate had risen 
to 6,500 to 1. 

Financial policies followed by the National Government were an 
important factor in the inflation. Of total Government expenditures 
in the postwar period, less than 25 percent were financed through 
taxation and other recurring sources of revenue. Another 10 percent 
were met by the partial liquidation of official gold and United States 
dollar reserves and former enemy properties. The deficit of approxi- 
mately 65 percent of the total budget was covered by currency expan- 
sion. The course of the inflation was fostered furthermore by a grad- 
ually declining public confidence in both the Government and its mone- 
tary unit. The resulting general reluctance to hold Chinese currency 
impeded the production and movement of goods and induced specula- 
tion and hoarding of commodities on a grand scale, all of which served 
to intensify greatly the scarcity of commodities brought about directly 
by military operations. 

It would have been unreasonable to expect the National Gov- 
ernment to make the transition from war to peace, involving as 
it did the reoccupation of areas long under enemy control, without 
a measure of inflation. With the outbreak of civil strife and the re- 



suiting high level of military outlays, continuing inflation could 
scarcely have been avoided. The budgetary and fiscal operations of 
the National Government, however, were of such a nature as to accen- 
tuate inflationary developments. Government expenditures were 
largely uncontrolled. Funds were dissipated by inefficient military 
commanders and in the maintenance of excessively large and wholly 
unproductive garrison forces. Much of the tax revenue nominally 
accruing to the Government failed to reach the Government’s treasury 
because of malpractices prevalent throughout the administrative 


Associated with the domestic inflation was a steady depletion of 
the Government’s foreign exchange reserves. Domestic inflation had 
the effect of inhibiting exports and of enhancing the demand for im- 
ports which could serve as a hedge against rising prices. In the 
months immediately following the Japanese surrender, the Govern- 
ment permitted the abnormal demand for imported commodities to 
operate without restriction. In March 1946, action was taken to pro- 
hibit the importation of certain luxury items and to place a larger 
list of non-essential imports under licensing. In November, control 
of imports was tightened by an expansion of the prohibited list, by 
the imposition of quotas upon important import items and by the 
extension of licensing to all other permitted imports. 

At the same time, however, the maintenance of unrealistic foreign 
exchange rates had the effect of subsidizing imports and penalizing 
exports. Moreover, the proliferation of local taxes and other artificial 
barriers to domestic trade tended to reduce drastically the flow of 
goods into China’s great coastal cities. Thus, the dependence of 
Chinese urban areas on foreign imports was greatly increased while 
foreign exchange receipts were simultaneously diminished. Other 
factors contributing to the unfavorable balance-of -payments position 
and a flight of capital abroad included the widespread smuggling of 
exports, the undervaluation of declared exports and the transmittal of 
inward remittances through illegal channels. 

The cumulative result of the various influences bearing upon China’s 
import-export position and of the National Government’s policy of 
open-market sales of gold as a counterinflationary device was a decline 
in official reserves of United States dollar exchange and gold from the 
V-J Day level of 900 million dollars to an estimated figure of approxi- 
mately 450 million dollars at the end of 1946. This use of official assets 


unfortunately did not involve an over-all expansion through pur- 
chases abroad of productive plant and equipment in China or an 
adequate inflow of repair and replacement parts for existing plant. 


Chinese regulations governing foreign trade and foreign exchange 
transactions hampered China’s foreign trade because of the character 
of the regulations and their administration as well as because of the 
direct restrictions they imposed. These regulations were highly com- 
plex, they varied considerably in their application as between different 
Chinese ports and they were often made effective immediately upon 
their announcement with consequent hardship to importers. It was 
recognized that the Chinese were confronted with a situation which 
required the husbanding of foreign exchange resources. There was, 
however, a general belief among foreign traders that the Chinese 
administrative mechanism charged with enforcing trade and exchange 
regulations was unnecessarily cumbersome and arbitrary. Charges 
were frequently leveled against the Chinese Government for alleged 
corruption and favoritism, open or indirect, to privileged Chinese 
firms. Some of the complaints of private foreign firms may have 
been occasioned by curtailment of trade due to the stringent foreign 
exchange situation which affected all business in greater or less degree, 
or by the natural tendency, following the relinquishment by foreign 
Powers of extraterritoriality, for Chinese firms to be given a larger 
share of China’s foreign trade. While due allowance must be made 
for these qualifying circumstances, many of the charges of favoritism 
and inefficiency appeared to be well grounded. 

In the field of shipping, the Chinese Government took the highly 
nationalistic position that, contrary to general international practice, 
no foreign flag vessels could carry cargoes from abroad to Chinese 
ports not designated as ocean ports. This position excluded foreign 
flag vessels from the Yangtze River beyond Shanghai and required 
transshipment in the Shanghai area of all cargoes being carried be- 
tween ports up the Yangtze, such as the major commercial center of 
Hankow, and foreign countries. In consequence, the transportation 
of such cargoes in Chinese waters was much more costly than it should 
have been, and the process of transshipment in the Shanghai area fre- 
quently made that port a bottleneck for commodities urgently needed 
in the interior of China. 


Despite the increasingly severe controls imposed by the Chinese 
Government on foreign trade, and the malpractices associated with 



enforcement of such controls, China contributed during this period to 
creating a framework in which effective international economic rela- 
tions might eventually be conducted. China’s negotiation of a com- 
mercial treaty and an aviation agreement with the United States, and 
its adherence to the General Agreement on Tariffs and Trade, were 
important steps in this regard. A modern comprehensive treaty of 
friendship, commerce and navigation was negotiated in 1946 to re- 
place the old treaty of 1903 and other treaties which had been based on 
the previously existing extraterritorial arrangements between the 
United States and China. Katifications were exchanged and the 
treaty became effective on November 30, 1948. The treaty was based on 
the principles of mutuality and nondiscrimination ; in general it pro- 
vided that each Government shall assure to nationals of the other, with 
some exceptions and subject to its general laws, the same treatment and 
rights enjoyed by its own nationals and provided also that the na- 
tionals of either in the territories of the other shall be entitled to any 
rights or privileges which may be granted to the nationals of a third 
country. The trade and commerce of the two countries with each other 
were also guaranteed similar rights to most-favored-nation treatment. 
Thus the treaty was in reciprocal terms and provided for no rights 
or privileges for nationals of the United States in China which it 
did not equally confer on Chinese nationals in the United States. 

Also in 1946 preliminary steps were taken for the negotiation of a 
reciprocal trade agreement with China. This agreement was even- 
tually consummated in 1947 when the United States negotiated with 
China and 21 other countries a multilateral reciprocal trade agree- 
ment (the General Agreement on Tariffs and Trade) which reaffirmed 
the principle of most-favored-nation treatment, incorporated various 
general provisions governing trade relationships and provided for 
tariff concessions resulting in mutual reductions or bindings of duties 
on certain tariff classifications of the respective countries. This agree- 
ment became effective with respect to China on May 22, 1948. 

A bilateral air transport agreement between the United States and 
China was signed in Nanking on December 20, 1946. This agree- 
ment is based on standard clauses drawn up at the Chicago Interna- 
tional Civil Aviation Conference of 1944 and incorporates the so- 
called Bermuda principles contained in the bilateral air transport 
agreement between the United States and the United Kingdom. It 
is to be noted that conclusion of the latter agreement in February 
1946 marked the establishment of a pattern of air transport agree- 
ments which, with slight deviations, the United States has negotiated 
ever since. The pattern of these air agreements involves in general 
the following factors: routes, privileges (accorded to an air carrier 


of one nation in the air space of a second) , rates, frequency of opera- 
tion, and capacity of aircraft. With the exception of prescribed routes 
over which aircraft of each contracting party operate, the remainder 
of the agreement is relatively standard and grants full reciprocity to 
each signatory country. The bilateral air transport agreements nego- 
tiated by the United States are purely commercial aviation agreements 
for the reciprocal exchange of commercial air rights. The United 
States-China air agreement makes no provision for base rights for 
either Government in the territory of the other. Under this agreement 
the airlines of each country are accorded the right to operate services 
to the other over three different routes. Since the conclusion of the 
agreement the United States has utilized two of the routes granted to 
it in services to Shanghai, while China has exercised its route privileges 
for the operation of a mid-Pacific route to San Francisco. 


During 1945 and 1946 a series of measures were taken by foreign 
governments which provided China with very substantial external 
economic aid. 58 The commodities and services made available by these 
various measures contributed to meeting China’s abnormal need fol- 
lowing the Japanese surrender for food, clothing, medical supplies 
and raw materials and provided the capital equipment necessary to 
begin the rehabilitation and reconstruction of Chinese agriculture 
and of certain key industrial and transportation facilities. 

The China program of the United Nations Relief and Rehabilita- 
tion Administration represented the largest single measure of foreign 
aid to China during this period and was the largest program that 
Unrra carried out for any one country. Unrra began its shipments 
to China in November 1945 and by the end of that year had shipped 
approximately 300,000 tons of supplies. The Unrra program for 
China continued throughout 1946 and 1947, and a few deliveries 
took place thereafter. The value of goods delivered to China under 
the Unrra program, including shipping and insurance costs, is esti- 
mated at 658.4 million dollars. The United States contribution to 
the world-wide Unrra fund was approximately 72 percent. It may 
therefore be said that the United States contribution to the Unrra 
China program amounted to 72 percent of 658.4 million dollars, or 
474 million dollars. Unrra’s China program consisted chiefly of food 
and clothing and of a wide variety of capital goods and materials 
important to the rehabilitation of China’s agriculture and industries. 
In addition, Unrra provided large numbers of technical and super- 

M See annex 181. 



visory personnel who assisted the Chinese in the distribution of con- 
sumption commodities and the installation of capital goods. 

During the latter part of 1945, the Chinese Government approached 
the Export-Import Bank with applications for the extension of cred- 
its to cover a variety of rehabilitation needs. No action was taken on 
these requests, however, and in January 1946 the National Advisory 
Council, acting in accordance with General Marshall’s recommenda- 
tions, decided that a major program of financial assistance to China 
must await satisfactory political and economic developments in that 
country. General Marshall was therefore able to use the possibility 
of American economic aid as a bargaining point in trying to achieve 
his political objectives. By early 1946, the progress of the negotiations 
between the National Government and the Chinese Communists made 
it appear that a peaceful settlement might be reached which would pro- 
vide a basis for gradual stabilization and rehabilitation of the Chinese 
economy. Consequently, the Export-Import Bank gave favorable 
consideration, upon the recommendation of General Marshall and the 
Department of State, to a number of Chinese applications and during 
the first quarter of 1946 authorized a total of 66.8 million dollars in 
credits to the Chinese Government. These credits were primarily for 
cargo vessels, railway repair materials, electric-power generating 
equipment and raw cotton, and they were all on a long-term basis 
except for the cotton credit, which was to be repaid in 24 months. A 
credit of 16 million dollars previously authorized for the Yungli Chem- 
ical Industries was not finalized by guaranty of the Chinese Govern- 
ment until 1947. This brought the total of Export-Import Bank 
credits actually made available to China after Y-J Day to 82.8 million 

In recognition of the magnitude of Chinese requirements for recon- 
struction and the possibilities for economic development under orderly 
conditions, the United States Government gave consideration during 
the same period to setting aside substantial funds to assist China in 
this task. In April 1946, following the recommendation of General 
Marshall and approval by the National Advisory Council, the Export- 
Import Bank authorized the earmarking until June 30, 1947, of 500 
million dollars of the Bank’s funds for the possible extension of indi- 
vidual credits to the Chinese Government and private Chinese in- 
terests. It was contemplated that such credits would be confined to 
particular projects and would be subject to the usual criteria govern- 
ing the Bank’s lending operations. No implementing agreements 
were consummated, however, between the Bank and the representatives 
of the Chinese Government. 


During the latter months of 1946, General Marshall and the De- 
partment of State recommended favorable consideration of certain 
Chinese projects by the Export-Import Bank. The Bank refused at 
this time to take favorable action on Chinese credit proposals chiefly 
because of the outbreak in mid- 1946 of widespread fighting between 
the Chinese Communists and National Government forces and the 
clear implications that this development carried for Chinese economic 
prospects. In this situation, the Bank was unable to find reasonable 
assurances of repayment regarding which it had a statutory obligation. 

In February 1946 the Canadian Government extended a long-term 
credit of 60 million dollars to the Chinese Government. Of the total 
credit, 25 million dollars was to be used to purchase (a) supplies 
and equipment originally requested by China from Canada as mutual 
aid but undelivered as of V-J Day, (b) other commodities in produc- 
tion in Canada on September 1, 1945, which were surplus to Canadian 
requirements, and (c) certain used industrial equipment, together 
with (d) the cost of reconverting and processing such equipment. 
The remaining 35 million dollars of the credit was to be used for 
equipment, supplies and services required by the Chinese Government 
for reconstruction and other post-war purposes. 

The United States extended a credit to the Chinese Government, 
somewhat similar to the Canadian credit referred to above, in an 
agreement of June 14, 1946, commonly referred to as the Lend-Lease 
“Pipeline” Credit Agreement. This agreement provided for the de- 
livery on a long-term credit basis, pursuant to section 3 (c) of the 
Lend-Lease Act, of civilian-type equipment and supplies contracted 
for but undelivered on V-J Day under the wartime lend-lease pro- 
gram for China. It was subsequently determined that a total of 51.7 
million dollars in equipment and supplies could be furnished under 
contracts covered by this agreement. 

The sale to China of United States civilian-type war surplus prop- 
erty with an estimated procurement value of 900 million dollars was 
authorized or recognized under an agreement of August 30, 1946, be- 
tween the two Governments. 59 The property was located in India and 
China and on 17 Pacific islands and consisted in large measure of small 
ships and marine equipment, fixed installations, vehicles of all types, 
construction equipment and air-force supplies and equipment. The 
remainder of the property comprised a wide variety of communications 
equipment, tools, shop equipment, industrial machinery, electrical 
equipment, medical equipment and supplies and chemicals. The 
agreed realization to the United States for this property was 175 million 

69 For the Chinese Communist reaction to this agreement see p. 180. 



dollars. Of this amount 55 million dollars was to be repaid in Chinese 
currency on a long-term credit basis, 20 million dollars of which the 
United States Government was in turn to use for cultural and educa- 
tional activities in China. The balance of this credit, 35 million dollars, 
was to be made available in Chinese currency for acquisition by the 
United States Government of real property in China for diplomatic and 
consular use and for other American governmental expenses in China. 
To this credit was added an agreed offset of 150 million dollars against 
the United States wartime indebtedness to China arising out of ex- 
penditures by the Chinese Government for the United States Army. 
While these considerations totaled 205 million dollars, the United 
States as a part of the agreement established a fund of 30 million dol- 
lars to be used by China for shipping and technical services arising out 
of the property transfer. This 30-million-dollar fund reduced the total 
United States realization to the net figure of 175 million dollars 

In October 1945 the Government of China had presented to the 
United States a proposal for technical collaboration in agriculture 
and forestry. In the course of the ensuing discussions it was agreed 
to establish a joint China-United States Agricultural Mission to 
make an intensive study of the problems of agricultural improve- 
ment in China, with special attention to be given those agricultural 
commodities which play an important role in Sino- American trade. 
The President of China stressed the importance of the mission’s 
assignment and technical collaboration in general in a letter to the 
President of the United States which read in part as follows : 

“We have been for centuries primarily an agricultural nation. 
The farmer is traditionally regarded with affection and respect. 
During recent times, unfortunately, our agricultural technique has 
fallen behind due to delay in the adoption and application of new 
scientific methods. I am keenly conscious of the fact that unless and 
until Chinese agriculture is modernized, Chinese industry cannot 
develop ; as long as industry remains undeveloped, the general econ- 
omy of the country cannot greatly improve. For this reason, I 
heartily agree with you that any plan for cooperation in economic 
development between our two countries should include agriculture.” 

The United States Government dispatched 10 agricultural experts 
to China for the mission, the Government of China appointed 13 and 
work was commenced on June 27, 1946. Conferences were held with 
Government officials, businessmen and agricultural specialists at 
Shanghai and Nanking, and field trips were made through 14 prov- 
inces and the island of Taiwan. One group concentrated on the broad 
aspects of the mission’s assignment — education, research, and rural 


economic and social problems — while other smaller sections studied 
the production and marketing of specific commodities including tung 
oil, silk, tea, carpet wool and fish. 

The mission submitted its report jointly to the two Governments 
late in 1946, and its recommendations were received by the United 
States Government as the conclusions of independent technical 

The report outlined in some detail a comprehensive and long-range 
program that the Chinese Government might undertake for the im- 
provement of China’s agriculture. The mission’s recommendations 
included the following points : (1) greater emphasis on fertilizer pro- 
duction, development of irrigation, improvement of plants and 
animals, development of forestry, and production of fruits, vegetables 
and livestock to improve diets; (2) adjustment of the exchange rate, 
reduction in costs of transportation and credit, and improvement of 
standardization and quality to encourage the production and export 
of important agricultural commodities; (3) provision of adequate 
farm credit, improvement of tenancy conditions, advancement of land 
surveys, registration, and appraisal, and enforcement of the Land Law 
of 1946 with respect to taxation of land; (4) furthering of programs 
relating to general education, public health, transportation, river con- 
servancy, and flood control; (5) emphasis on agricultural instruction, 
research and extension work within an integrated system; (6) creation 
of a single Government bank to serve agricultural needs; (7) con- 
sideration of measures to guard against a rapid increase in the growth 
of population. 

In his statement of December 18, 1946, President Truman had 
renewed the offer of American assistance in implementing the recom- 
mendations of the mission in so far as feasible. 

Despite the continuing efforts of the American Government to elicit 
Chinese action few constructive measures were taken by the Chinese 
Government in the field of agricultural improvement. Several of the 
recommendations of the Joint Mission, however, were later embodied 
in the program of the Joint Commission for Rural Reconstruction in 
China, established under the terms of the China Aid Act of 1948. 60 

60 See chapter VIII. 


The Ambassadorship of John Leighton 
Stuart, 1947-1949 



The American mediation effort described in chapters III and V had 
ended, but the Chinese Government did not at once cease its attempts 
to find some method for the resumption of political negotiations. On 
January 15, 1947, the Generalissimo informed Ambassador Stuart that 
he had been meeting for several days with prominent Government 
leaders in an attempt to determine some means of reopening negotia- 
tions. These consultations resulted in four agreements within the 
Chinese Government which were given to the Ambassador. The points 
listed were as follows : 

(1) The National Government desired to send a delegation to 
Yenan or would invite the Communist Party to send one to Nanking 
to continue discussions, or it would agree to a round-table conference 
at any mutually acceptable place. 

(2) The Government and the Communists should at once issue a 
ceaserfire order and confer on its implementation. 

(3) The Government desired to resume discussions of practicable 
plans for the reorganization of the army and the restoration of com- 
munications based on the principles of the Committee of Three. 

(4) The Government expressed a desire to reach an immediate 
agreement with the Communists on the political control of disputed 

The Generalissimo asked the Ambassador to get in touch with the 
principal Communist delegate still in Nanking, Mr. Wang Ping-nan, 
to ascertain if the Communists would invite a Government peace 
delegation to Yenan. Dr. Stuart was specifically requested not to 
disclose the foregoing four points, but if asked he could say that 
tentatively General Chang Chih-chung, Governor of Sinkiang, would 
represent the Government. Dr. Stuart could also state, if asked, 
that the Government attached no conditions to peace discussions. It 



was the avowed hope of the Generalissimo that discussions without 
conditions might be more fruitful than previous ones and that the 
original spirit of the Political Consultative Conference agreements 
could be recaptured. 

On January 16 the Ambassador saw Wang Ping-nan, who asked the 
anticipated questions and received the replies which the Generalissimo 
had authorized. The Ambassador took particular pains to make it 
clear that he was acting only as a transmitting medium and not as 
a direct participant. The Chinese Communist reply was prompt and 
categorical to the effect that if the Government would agree to the 
two previously stipulated conditions (that is, the abrogation of the 
constitution and the restoration of the military positions held Janu- 
ary 13, 1946, the effective date of the cease-fire agreement) the negoti- 
ations could be resumed in Nanking; if not, nothing could be gained 
by sending a delegation to Yenan. The Communist representative 
insisted, however, that this reply was not intended to break off negoti- 
ations but rather to clear the ground for subsequent resumption. The 
Ambassador on January 23 informed the Department of State that it 
was his belief that the Chinese Communists meant what they said on 
this point as they were militarily confident and believed that the 
Government would be forced within the ensuing few months to reopen 
discussions on Communist terms. 

On January 20 the Ministry of Information, on behalf of the 
National Government, published a long statement outlining the course 
of negotiations with the Chinese Communists. It stated, int&r alia: 

“As far back as the beginning of the war of resistance, in order to 
pool together the nation’s efforts, the Government called the People’s 
Political Council consisting of representatives of all political parties 
and independents. 

“From start to finish, the Government has regarded the Communist 
problem as a political problem. The Kuomintang at its Tenth Cen- 
tral Executive Committee Plenary Session in 1942 and Eleventh 
Plenary Session the following year persistently advocated an early 
solution through political means. 

“After May 1944 the Government has been negotiating with the 
Communist Party without let-up in the hope that a peaceful settle- 
ment could be reached.” 

The Ministry of Information concluded its statement with the an- 
nouncement that the Chinese Government would make another appeal 
to the Chinese Communists for additional conversations and listed the 
four-point proposal, which had previously been communicated to the 
Communist representatives. The Communists replied publicly on 



January 29, charging that the four points of the Government were 
nothing but a fraud which rejected the real prerequisites for peace 
negotiations. The Communists refused to accept the Nationalist 
offer until their previous two conditions, namely abrogation of the 
constitution and a return to the military status quo of January 13, 
1946, had been accepted. On the following day the Nationalist 
Ministry of Information repeated its previous offer but added that 
the two conditions demanded by the Communists would have the 
effect of destroying the Chinese Republic. The Government there- 
fore felt that it had no alternative but to proceed with its own pro- 
gram for political democratization. It appealed to all groups and 
factions to join in the work of the reconstruction and rehabilitation 
of China. The Generalissimo, on February 16, 1947, followed up this 
plea with one of his own, pledging his Government to a 10-point pro- 
gram of economic rehabilitation and asking for the cooperation of all 
citizens of China. 1 On February 11, the Government notified the 
Communist delegation in Nanking that its presence in Government 
areas was no longer desired. 


Indications of the attitude of the Chinese Communist Party were 
given in statements which appeared early in 1947. The first was a 
statement by Chou En-lai 2 which, together with the other documents, 
represented a major change in the public official Communist line 
and a distinct reversal of policy as previously set down in 1945 by 
Mao Tse-tung, as Chairman of the Central Committee, in his report 
to the Seventh Party Congress entitled The New Democracy. The 
second document was a statement by Lai Ting-yi, head of the Depart- 
ment of Information of the Chinese Communist Party and a member 
of the Central Committee, in which he aligned the Chinese Communists 
with Russia on foreign policy and denounced the United States as the 
heir of German and Japanese Fascists. 3 On February 1, the Central 
Committee issued a strong denunciation of the National Government, 
accused the Government of selling out China to foreign interests and 
announced that the Chinese Communists would refuse to recognize 
any agreements and understandings reached by the National Govern- 
ment subsequent to January 10, 1946. 4 

1 For full text of these statements see annex 116 (a) -(d). 

2 See annex 117. 

3 See annex 118. 

4 Full text in annex 119. The length to which this change has gone is indicated 
in a speech by Mao Tse-tung given on June 30, 1949, which is included as annex 
120 . 




On March 10, at a meeting of the Council of Foreign Ministers 
at Moscow, the Soviet Foreign Minister, Mr. Molotov, proposed that 
problems relating to the settlement of the civil war in China be in- 
cluded in the agenda of the meeting of the Council. The United 
States Government did not concur in the Soviet proposal. This view 
was reinforced by the instantaneous reaction of the Chinese Govern- 
ment. The Chinese Foreign Minister, Dr. Wang Shih-chieh, on March 
11 informed General Marshall that China would strenuously object to 
having its internal affairs placed on the agenda of the Moscow Con- 
ference. At the same time the Foreign Minister issued a similar 
statement to the press. The Chinese Communists took their cue from 
Moscow and issued a statement favoring inclusion of China on the 
Moscow Conference agenda, but insisted that the Chinese Communists 
themselves should be represented at any such discussions. In view of 
the opposition to the Soviet proposal, it was dropped. 

Dr. Wang also informed the American Ambassador that on March 8 
the Soviet Ambassador had called with two requests: (1) that 
China take over the administration of Dairen and Port Arthur and 
(2) that joint operation be undertaken of the railway line from Dairen 
through Mukden to Changchun. Subsequently a Chinese Govern- 
ment Mission under strict Russian surveillance did visit Dairen to 
survey the situation. The negotiations reached an impasse over the 
questions of armed police and the admission of Chinese troops into 
the area and were not renewed. 

YUAN, MARCH 1, 1947 

In the meantime, the functioning of the National Government had 
been paralyzed to a considerable extent by the slowness with which 
its projected reorganization was proceeding. The new Constitution 
of China had been adopted by the National Assembly on December 25, 
1946, with the provision that it would go into effect one year from the 
date of its adoption. During the interim period a transition govern- 
ment would be organized to prepare the country for constitutional 
government, to eliminate one-party rule by termination of the period 
of political tutelage, and to prepare other groups for participation 
in the national political life. The organization of this new govern- 
ment proved to be far more difficult than had been anticipated. 

The difficulties principally arose from the inability of the Kuomin- 
tang and the third parties to agree in their negotiations upon the 
division of the principal positions in the Five Yuan and the State 
Council. It should be noted, parenthetically, that throughout these 



negotiations a certain number of positions were reserved for the 
Communist Party if it should choose to participate. There was at no 
time, however, any indication that the Communists had any intention 
of participating and, in fact, all their public announcements were 
emphatic in stating that it would be impossible for them to participate 
under what they called “an illegal constitution.” 

At a fairly early stage in the negotiations it also became apparent 
that the Democratic League, the third largest party, had so far asso- 
ciated itself with the stand taken by the Communists that it too would 
not participate. This reduced the negotiations, apart from the in- 
ternal manipulations within the Kuomintang itself, which became the 
most important phase, to a division of positions between the Kuomin- 
tang on the one hand and the Youth Party and the Social Democrats 
on the other. These two minor parties commanded so small a follow- 
ing that the efforts to get them in the Government could be considered 
important only in a symbolic sense of nominally ending one-party 

At midnight, March 1, the Government announced the appoint- 
ment of 50 new members to the Legislative Yuan, of whom 17 were 
Kuomintang, 13 Youth Party, 12 Social Democrats, and 8 non-parti- 
san. At the same time 25 new members were named to the Control 
Yuan, of whom 9 were Kuomintang, 6 Youth Party, 7 Social Demo- 
crats, and 3 non-partisan. Forty-four new members were added to 
the People’s Political Council, of whom 11 were Kuomintang, 11 
Youth Party, 11 Social Democrats, and 11 non-partisan. These new 
members added to the old membership gave the third parties a 
minority representation, but nonetheless one much larger proportion- 
ately than their actual political following. 

The next day Dr. T. V. Soong, following a frank conversation with 
the Generalissimo, resigned as Prime Minister. Ambassador Stuart 
interpreted this development and its background to the Department 
of State in the following terms on March 3 : 

“T. V. Soong had a long talk with Generalissimo on the afternoon 
of the evening that he handed in his resignation. At any rate the 
latter interview was not unamicable and the Generalissimo, although 
urging him to maintain his position as chairman of the Supreme 
Economic Council, readily accepted his resignation as President of 
the Executive Yuan and then without much ado as the chairman 
of the Supreme Economic Council as well. My surmise from avail- 
able information is that Generalissimo propounded to T. V. Soong 
in the first conversation his military plans for intensification of the 
civil war which intev alio, will require, in view of recent price increases, 
a rise in pay and supply allotments for the Army in the near future. 



Hemmed in on the one side by relentless demands of civil war and 
on the other by increasingly painful limitations which his growing 
unpopularity was imposing on his freedom of action, he decided to 
save his reputation — if not his face — by chucking in his hand before 
it was called and he was well smeared. 

“My belief is that the Generalissimo has determined to embark on 
an all-out military campaign to free as much of China proper from 
Communist control as possible to the end that after about three months, 
the Communists would be chastened (where they are now blatantly 
bumptious) and concentrated in a much smaller area. My guess is 
that feeling as he does about Communists, the Generalissimo, although 
nervous about the Mqscow Conference, does not envisage any improve- 
ment promising permanency in Soviet-American relations and there- 
fore is not without hope that the United States will in due course 
come in some fashion and to some degree to the Government’s assist- 
ance. There is no doubt that he is now increasingly concerned about 
the rate of financial deterioration and the ability of Communists to 
prolong the struggle and create havoc. However, he has made a point 
of telling Chinese who call upon him that China must stand on its 
own feet and face the future without American assistance. I have a 
sense that the CC Clique 6 work on him in this wise and, concomi- 
tantly, to the effect that he will be getting the worst of both worlds 
if he weakens himself domestically and fails to achieve compensatory 
aid from the United States. That his mood is exigent and bitter 
is evident as indicated in today’s speech. As I see it, these next few 
days are important for the reorganization plans — important in that 
this fight-it-all-alone mood should not find reflection in the appoint- 
ments and powers of the State Council and the Executive Yuan.” 


On March 12, Ambassador Stuart summarized the developments 
of late February and early March, together with his interpretation as 
given below, this being of particular importance in view of the im- 
pending Third Plenary Session of the Central Executive Committee 
of the Kuomintang which would have an important bearing on future 
developments : 

“Events have moved so rapidly in China during the past 10 days 
and have included so many complicating factors that it might be use- 
ful at this time to present a brief over-all summary drawing together 

“The CC Clique is the extreme right-wing faction of the Kuomintang and is 
completely dominated by two brothers, Chen Li-fu and Chen Kuo-fu, who have 
long been closely associated with the Generalissimo. The latter has relied on 
them to discipline the rank and file of the Party. 



and correlating previous telegrams. The two main aspects are, of 
course, the military and the political-economic, with the former giv- 
ing a kind of desperate urgency to the need for political adjustment 
because the continuance of civil war is an increasing drain on the 
national economy, making a mockery of attempts to move in the 
direction of normal economic development. 

“The current military campaigns have surpassed in scope anything 
seen in many months. The Government obviously wanted, and badly 
needed, a major military victory in Shantung. This it has failed to 
obtain. Communists took the initiative in Manchuria, managing to 
force their way to the very gates of Changchun. They have now been 
turned back by Nationalist reinforcements and in this sense have suf- 
fered a defeat if, as has been suggested, their objective was a territorial 
victory to strengthen the hand that they hope the Soviets will play 
for them at the Moscow meeting. If, on the other hand, the prin- 
cipal objective was further to sap Nationalist strength, then they have 
achieved a victory. The Military Attache’s intelligent guess on casual- 
ties is 10,000 for the Government and 20,000 for the Communists in 
Manchuria, and 40,000 for the Government and 20,000 for the Com- 
munists in other areas, mainly Shantung. 

a The establishment of general headquarters at Hsuchow seems to be 
a desirable and long-needed development from the Government stand- 
point in that it puts it in a better position to direct and control opera- 
tions. The Military Attache also states he sees signs on both sides 
of a decreasing desire to fight and more particularly by Government 
forces. Even high-ranking officers have said to him that whereas 
there seemed to be some point in endless fighting when the enemy was 
Japan, there is not much stomach for fighting when it is against 
Chinese. This lack of morale appears to be reflected among the troops 
who do not understand what the civil war is all about and who, in 
some instances, have been susceptible to Communist appeals to lay 
down their arms. The Generalissimo’s insistence on increased pay 
to improve troop morale played a part in Soong’s resignation. 

“Against this grim background have been the political changes of 
the last 10 days, which, so far, are inconclusive. The reorganization 
of the State Council and the Executive Yuan is still in the negotiation 
stage. The stumbling block is whether and on what terms the Social 
Democrats will participate .... 

“In the excitement of other events, the announcement by the Gov- 
ernment of additional government, third party and non-partisan 
members to the Legislative and Control Yuan, the PPC, and the 
Standing Committee for the Enforcement of the Constitution caused 
only a minor ripple. The Government stand that this development 



constitutes a significant step in the direction of relinquishing one- 
party control has received little attention and is not likely to do so 
pending reorganization of the State Council and the Executive Yuan. 

“The heightened tempo of repressive police activities all over the 
country, and particularly in areas where the Communists have been 
most active has been widely reported and variously interpreted, de- 
pending on the political views of the commentator. This development 
has been strongly condemned in independent and left-wing circles. 
At the same time the attitude has been general that however repre- 
hensible these activities may be, the Government can hardly be ex- 
pected to loosen its controls as long as it is engaged in a life and death 
struggle. Concomitantly, there is general belief that with the re- 
turn of all Communist delegations to their own territory the possi- 
bility of peace negotiations and political settlement has been indefi- 
nitely postponed, making all the more improbable any prospect of 
halting economic deterioration.” 


The Generalissimo in his statement of February 16, indicating the 
intention of the Government to consolidate its current positions, had 
said : “On its part the Government will confine its military efforts to 
the protection and restoration of communication systems so necessary 
for the economic life of the nation and we shall spare no efforts to 
continue to seek for a political solution of the Communist problem.” 
At that time Dr. T. V. Soong had categorically stated to the Ameri- 
can Ambassador that both he and the Generalissimo were of the same 
mind, that Yenan should not be attacked. Subsequently the Military 
Attache was similarly advised by the G-2 section of the Ministry of 
National Defense. It was therefore not without significance that the 
Government chose the middle of March to launch an attack on Yenan 
and capture the already largely evacuated Communist capital. The 
military claims of the Government subsequently proved to be ex- 
aggerated, but the psychological effect in non-Communist China at a 
critical point was important. From a strictly long-range military 
standpoint, the capture of Yenan served principally to over-extend 
Government lines and drain the national economy. The Ambassador 
commented as follows on this subject : 

“Although the Government claims it routed over 100,000 Com- 
munist troops, this appears to be a gross exaggeration since Ameri- 
can observers during the return of Communist mediation personnel 
reported the virtual evacuation of Yenan. It has long been apparent 
that the Communists have prepared well for this eventuality and 
that they never had any real intention of defending Yenan should such 



action appear to be costly. Rather it is more in keeping with their 
long developed tactics to evacuate any given point in the face of enemy 
pressure, draw him into a pocket, and thereafter gradually sap his 
strength with guerrilla tactics. Furthermore, Government lines are 
seriously extended into territory which can be counted upon to be 
hostile in all respects.” 

Indicative of Government confidence in a settlement by force was 
the public claim by the Chief of Staff at this time that the Com- 
munists would be defeated in six months. Coincidentally, the Gen- 
eralissimo told Dr. Stuart that by the end of August or the beginning 
of September the Communist forces would either be annihilated or 
driven into the far hinterland. 


It was symptomatic of the growing popular discontent that May 
and J une should witness the most serious outburst of student demon- 
stration and violence since the end of the war against Japan. In 
every major academic center of China students, for the most part 
with much sympathy from University faculties, went on strike, de- 
manding an end of the civil war, effective action by the Government 
to improve national economic conditions and relief for their own in- 
creasingly desperate economic plight. Numerous deaths resulted from 
these demonstrations and it was only because of skillful handling of 
the situation in such key areas as Peiping and Shanghai by certain 
key individuals and the opportune ending of the school year, which 
permitted the Government to close the universities for the summer, 
that more serious disturbances were avoided. The Government was 
no doubt concerned over the implications of these disorders as indi- 
cative of mounting popular discontent. The situation was further 
complicated by a series of relatively minor but potentially dangerous 
rice riots coming at a time when the new crop had not yet been har- 
vested and the stocks of the previous year were rapidly being ex- 
hausted. 6 

The Ambassador reported as follows on May 29 : 

“Over-all political scene which continues to be dominated largely 
by the economic and military situation, is deteriorating at an accel- 
erated rate. Within recent weeks existing bad rice situation, brought 
about in the main by military requirements and hoarding, has added 
to the spreading unrest. On May 18 the Government issued an edict 
prohibiting student demonstrations which was immediately disobeyed 
in major urban centers and has resulted in further loss of prestige by 

a See annexes 121 and 122 for Embassy reports of May 20 and June 4, 1947. 



the Government. At the present time the students are actively 
agitating for a nation-wide general strike to commence June 2, but the 
student movement has thus far been characterized by considerable in- 
decision and has not fallen under the control of any single group or 
party. There are strong indications, however, that the student move- 
ment will assume larger proportions and eventually come under the 
leadership of anti-Government groups, particularly of the Democratic 
League if not the Communists. . . . 

“As general unrest and disillusionment increases, Communist pres- 
tige is enhanced, largely through recent military successes in north 
China and Manchuria. Although completely reliable information is 
not yet available, it is reasonably clear that in Manchuria the Central 
Government has suffered reverses along the Chinese Changchun Rail- 
way and at least a partial Government withdrawal in the Northeast 
may become necessary. Recent Communist military activities in Man- 
churia have been well coordinated with large-scale raids on north 
China and Jehol rail lines assisted in a large degree by the military 
blunderings of General Tu Li-ming. An important aspect of the 
north China situation is the evident Communist capability of dis- 
rupting communications between the Kailan mines and the sea which 
will have continual effect upon the coal supply situation, especially 
for Shanghai. 

“Although anti-civil war sentiment is increasing, largely among stu- 
dent, academic and business groups, it has thus far not reached a point 
where it will be decisive in influencing the Government as evidenced 
by the character of the two statements issued by the Generalissimo this 
week. The fact that he felt called upon to issue any statement speaks 
for itself. One indication that there is growing sentiment among 
liberal Kuomintang members of the Government for peace negoti- 
ations was a resolution presented to the Legislative Yuan recently by 
some twenty of its members, calling for the resumption of peace talks 
and reportedly having the tacit approval of Dr. Sun Fo. On May 27, 
the PPC adopted a resolution to invite the Communists to resume 
peace talks which can be interpreted as largely a Kuomintang ma- 
neuver stemming from recent military reverses and growing anti- 
civil war sentiment, and designated to pin sole responsibility for con- 
tinuation of the civil war on the Communists. In the face of Com- 
munist military successes, it seems unlikely that the Communists 
would be prepared to join in peace talks except on terms much more 
favorable than the Government is apparently now willing to accept. 

“Nor is there any basis for believing that the Communists do not 
regard time and tide as working for them or that they would be 
willing at this time to accept equitable and feasible proposals. 



“For the immediate future the gravest danger to the Government 
would result in this atmosphere if disaffection commences among 
National troops with the Government unable to supply adequate 
rations. There has been fairly steady deterioration of morale in the 
Government forces, especially in the Northeast, but for the time being 
it is believed that the Government can hold the loyalty of the best 
trained and equipped troops. It may be anticipated that Government 
efforts will be bent towards supplying these troops adequately and in 
expectation that civilian unrest can be held in check or quelled by a 
show of force.” 


The Ambassador further reported on June 7 as follows : 

“It is obvious that the Government faces in Manchuria the proba- 
bility of a military debacle of large proportions. It has already 
withdrawn from substantial areas previously under Government con- 
trol. J udging from the ineptitude and incompetence thus far demon- 
strated by General Tu Li-ming, it is probable that the Government’s 
defeat may assume even larger proportions. It seems to lie within 
the Communists’ power either to continue to bleed the Government’s 
strength in Manchuria or to force further Government withdrawal.” 

It was also symptomatic of popular uneasiness and confusion that 
the People’s Political Council, which had played such a significant role 
during the war against Japan as a sounding-board of public opinion, 
should on May 26, in its last session before it passed out of existence, 
pass by a large majority a resolution inviting Communist representa- 
tives to come to Nanking for discussions on ways and means of bring- 
ing about the termination of the civil war. The Embassy pointed out 
that this resolution represented the growing discontent of Chinese 
intellectuals with the Government and the mounting demand for some 
kind of a peace settlement. 7 The People’s Political Council at the 
same session, however, passed a resolution demanding continuation of 
the punitive action against the Chinese Communists. 

The invitation of the People’s Political Council was promptly and 
summarily rejected by the Communists as another evidence of Gov- 
ernment insincerity. The Ambassador on June 18 reflected popular 
speculation on further developments in the following report: 

“President Chiang believes that he had conclusive evidence of a 
Communist plot to create widespread disorders on June 2 and is no 
less convinced that the measures taken thwarted this. He unquestion- 
ably over-estimated the Communist influence in the recent student 

7 See annex 123. 



demonstrations and probably realizes this now himself. There were 
divergencies in what occurred in the principal cities. The tragic 
death of three students in Wuhan University and the serious wound- 
ing of three others, together with a number of minor casualties were 
on the initiative of the Hankow garrison commander, who has been 
summarily dismissed. 

“The PPC peace resolutions have been presented through the Stand- 
ing Committee of that body to the State Council, which approved 
them in principle but has asked that they be made more concrete for 
final action at the next meeting of the State Council. . . . 

“In contrast with almost all the other high officials President Chiang 
is maintaining his calm self-control and a somewhat sobered confi- 
dence. There is a general feeling of frustration among the others due 
primarily to the objective facts with which they are all familiar but 
intensified by the nervous fear of the Communists. . . . 

“It requires a certain temerity to attempt any forecasts, but it would 
seem that one of three possible consequences will follow without much 
delay from the present critical conditions: 

“1. President Chiang will assert himself as the leader of an attempt 
to settle the Communist issue either by securing their assent to renew 
negotiations or by demonstrating that they are in effect an armed 
rebellion and as such opposed to the national welfare. I have been 
hoping that he would be able to do this in a dramatic, revolutionary 
way that would catch the imagination of his people. This is probably 
expecting too much, but he has gone so far in discarding his earlier 
preconceptions and adopting progressive ideas that I believe he can be 
influenced to further advance. This will perhaps be slower and much 
less satisfactory than a more spectacular procedure but it has real 
possibilities and is perhaps by all odds the most hopeful solution. 

“2. With the threatening catastrophe drawing closer it is quite 
possible that a nucleus of enlightened, non-partisan leaders may 
emerge who will attract the more liberal elements from within the 
Kuomintang, be supported by the politically conscious public and 
come to terms with the Communists. President Chiang would pre- 
sumably disappear from the scene, Premier Chang Chun, T. Y. Soong, 
or some other outstanding figure might assume leadership, and an ad 
interim coalition government be established. Among the disadvan- 
tages would be the inexperience of the new group and the inability, 
especially conspicuous among Chinese, of a loosely-formed body to 
cooperate effectively. 

“3. There will be complete disintegration of the present Central 
Government with the Communists in control of their own territory, 
which they would use every effort to extend. Sectional governments 



would be established under the strongest man or group in the area 
with all the evils of such chaotic and unstable conditions.” 

Evidence of growing deterioration in the general situation and of 
increasing popular dissatisfaction with the Government and its con- 
duct of the civil war was being received not only from the better- 
known urban centers such as Shanghai, Nanking and Peiping, but 
was also disturbingly obvious throughout all sections of the country. 
Perhaps the most disturbing report received by the Embassy came 
the last week in June from the American Consul General in Mukden. 
He reported the gradual worsening of the Government’s military 
position, personal sqtiabbling between military commanders, growing 
Communist initiative which kept Government forces disorganized 
and off-balance, the tightening of the economic situation and the slack- 
ening popular morale, which made the local populace increasingly 
receptive to almost any change which might offer some prospect of 
stabilization. It was a picture of Government corruption, inefficiency 
and aimlessness in the face of a major disaster. 8 

The downward course of the economic and financial situation in 
China during 1947 is described in more detail in chapter VIII, where 
the question of further extension of aid by the United States is 
also discussed. It was impossible for the United States Government 
to consider that question apart from the problem of reforms in the 
Chinese Government, since without such reforms no financial aid could 
provide a remedy. 


During the war against Japan the United States endeavored to 
encourage the Chinese Government to effect various reforms which 
would serve to strengthen the Government and thus contribute to 
the fight against a common enemy as well as lay the foundation for 
stability and progress in the post-war period. At the request of the 
Chinese Government, the United States Government sent American 
advisers and technical experts to China to assist the Chinese Govern- 
ment in various fields, such as soil conservation, public health, coop- 
eratives, animal husbandry, industrial production and medicine. 


During the period of General Marshall’s mission to China, both he 
and Ambassador Stuart repeatedly emphasized to the Chinese Gov- 
ernment leaders the desirability and also the necessity of formulating 

* See annex 124. 



and carrying out measures of reform which would improve govern- 
mental administration and efficiency, win for it popular support and 
confidence and contribute to the effective use of American aid. 

Following General Marshall’s departure from China and in con- 
tinuation of his efforts, Ambassador Stuart took every opportunity, 
in conversations with Government leaders, to stress the need for action 
by the Government which would result in the emergence of liberal 
elements to positions of leadership, the lessening of the influence of 
the reactionary group and the carrying out of basic measures of reform. 
It was felt that only through such action could the Government suc- 
cessfully meet the challenge of the Chinese Communists and be able 
to prevent dissipation of its own resources and to make effective use 
of American aid. 

In the light of these considerations, great importance was attached 
to the outcome of the efforts and plans being made for reorganization 
of the Government. The Third Plenary Session of the Central 
Executive Committee of the Kuomintang met during March and its 
meetings gave some indication of the struggle for power between 
conservative and liberal factions of the Party. The two principal 
points of interest were (1) the efforts of certain factions within the 
Kuomintang to obstruct reorganization of the Government and (2) 
the struggle for power and position between the reactionary CC 
Clique and the loosely knit Political Science Group. On the first 
point, the Generalissimo, supported by the liberal elements, was 
successful in blocking the drive to stop reorganization. In the 
struggle between factions, the Generalissimo emerged in a stronger 
position than before, but at the same time the CC Clique continued 
in control at all levels of the Party machinery. 

This intra-Party struggle for personal power occurred against the 
background of the deterioration of the Government’s prestige and 
position and apparently without regard for its effect on the Govern- 
ment and unity of purpose. The Ambassador commented on March 12 : 

“Evidence of CC Clique expansion into the financial field will not 
increase banking and business confidence in the Government — it is 
also additional evidence of the Generalissimo’s tactics of not allowing 
any one group to gain exclusive control over the finance of the 

The Ambassador pointed out on April 5 some of the difficulties 
connected with the efforts for governmental reorganization and the 
Generalissimo’s part therein : 

“The tragic paradox of his position, of which he may be unaware, 
is that he is being compelled by circumstances to utilize the quali- 



fications which the CC Clique can offer. At the same time this Clique 
exploits its preferred position to render more firm its hold on the 
Party and the country; and with time the Generalissimo, therefore, 
may well become less and less able to dispense with them or to cir- 
cumscribe their activities which can only serve to aggravate those 
social conditions basically giving rise and strength to the Communist 
movement.” 11 

The Ambassador also commented : 

“The Foreign Minister remarked the other day on the irony of a 
situation where the Generalissimo, having been made self-conscious 
about his ability to dictate a political settlement and consequently 
reluctant to use bludgeoning tactics, finds himself in endless political 
dickering which only delays that reorganization which his liberal ad- 
visors have been urging on him.” 

The Ambassador also reported that the CC Clique was attempting 
to build itself up in the popular mind as the truly liberal and revolu- 
tionary element of the Party; that the CC Clique was putting its 
main effort into preparation for the elections which would precede 
the coming into effect of the constitution on December 25, 1947 ; and 
that preparations were proceeding for the termination of political 

The Central Executive Committee of the Kuomintang issued a 
manifesto on March 24 prior to the conclusion of its session. This 
manifesto did little to clarify the situation beyond general state- 
ments on broadening the basis of the Government, removing obstacles 
to national unification, stabilizing the national economy, striving for 
world peace and building up the potential strength of the country 
for national reconstruction. 1 * 

APRIL 17, 1947 

On April 17 the reorganization of the Executive Yuan and the 
State Council was announced, with General Chang Chun as Presi- 
dent of the Executive Yuan or Prime Minister. At the same time, 
Dr. Sun Fo, son of the founder of the Chinese Republic, was elected 
Vice President. Nominations by the Generalissimo for the other 
four Yuan showed no change. A series of official statements accom- 
panied this completion of the reorganization. President Chiang, in 
a statement on April 18, hailed the reorganization as another step 
in the ending of political tutelage and again offered the Communists 

11 See annex 125. 

13 See annex 126. 


an opportunity to participate in the Government if they would 
abandon their policy of seizing power by force. At the same time the 
political program of the National Government was announced, which 
largely followed the earlier outline of the manifesto of the Central 
Executive Committee of the Kuomintang, with the addition of guar- 
antees for civil liberties. On April 23 the Minister of Information 
in his weekly press conference made a similar announcement on be- 
half of his Government that the Kuomintang had ended the period 
of political tutelage. The same evening the new Prime Minister, 
General Chang Chun, pledged himself and his Government to the 
fulfillment of the obligations which the Government had undertaken 
publicly during the preceding days. 1 * 

In commenting on the reorganization of the Government, the Am- 
bassador stated that it was too early to assess with any accuracy the 
eventual effect of the State Council reorganization and that any such 
assessment must be approached with caution in the light of a series of 
past Chinese Government reorganizations which had been largely 
for external effect and had brought little effective change to the 
Chinese domestic scene, even though the majority of Kuomintang 
members were forward-looking modern Chinese. The Ambassador 
further stated : 

“In summary, the composition of the State Council is as regards 
the Kuomintang and independents as good as could be expected in 
the circumstances. Whether or not the State Council, which will con- 
stitute itself on April 23, if its members can reach Nanking by that 
date, will assert itself in such a manner as to bring about substantial 
social and economic reform in China remains, of course, a question 
depending upon many factors, not the least one being the attitude of 
the Generalissimo toward it and his ability to control the Kuomin- 
tang as the still dominant political party in China.” 

The Ambassador noted with some concern the establishment at 
this time of a separate Kuomintang political committee, the secre- 
tary general of which was Chen Li-fu, the leader of the CC Clique, 
and pointed out that it was a safe assumption that this committee 
would have an important role in controlling the Kuomintang po- 
litical machine and establishing party policies. He concluded: 

“In final analysis the major imponderable is whether or not the 
Generalissimo will be capable of seeking and being guided by the 
advice of liberal-progressive public servants rather than acceding to 
the reactionary henchmen personally loyal to him.” 14 

18 See annex 127 (a) -(d) for full text of statements. 

14 See annex 128. 



While the governmental reorganization was a step in the right 
direction and gave some hope for improvement, the behind-the-scenes 
political maneuvering for power without regard for the position of 
the Government itself continued to hamper efforts toward improve- 
ment in administration. This disunity and the political machinations, 
despite the serious situation with which the Government was con- 
fronted, were reflected in the circumstances surrounding the student 
demonstrations which occurred on a nation-wide scale in May. The 
Ambassador’s comment on these demonstrations evidenced their 
character : 

“Leadership and motivation of the demonstrations have shown defi- 
nite signs of changing. Most competent observers believe the original 
impetus was given by the CC Clique which was desirous of inciting a 
series of disorders which would in time publicly discredit a Political 
Science Group-dominated Government by proving it incapable of 
maintaining order, and in the long run provide the justification for 
a strong-arm, right-wing government coming into power either 
through a coup d’etat or through sweeping the elections to be held this 

These activities, of course, played into the hands of anti-Govern- 
ment elements and as stated by the Ambassador : “It must be assumed 
that the Communists are present and, if not already active, are pre- 
pared to exploit the situation should it become necessary or desirable.” 

On May 29 the Embassy reported on developments to the Depart- 
ment as follows : 

“The reorganized Executive Yuan under Chang Chun is more 
strongly based than the previous T. V. Soong regime, but the political 
maneuvers of the CC Clique and the pace of economic and military 
developments have tied its hands to date. Furthermore, in the face of 
existing problems, non-Kuomintang participants in the reorganized 
Government have thus far shown no capacity for initiative. However, 
outlook for next few months is not, in the Embassy’s opinion, for any 
spectacular collapse but in the direction of increasing deterioration 
in Government authority and control. In the meantime, general Gov- 
ernment sentiment will continue to look to American aid as a means 
of staving off further economic and military deterioration.” 

Further indication of the need for positive measures by the Chinese 
Government to restore popular confidence was contained in the Am- 
bassador’s comments on the situation on June 18 : 

“The growing discontent with or even hostility toward the Govern- 
ment has been stimulated among intellectuals by the extremely harsh 
measures against students and among the unthinking masses by the 


mounting costs of livelihood. In its simplest terms the complaints 
center around freedom and food.” 

The Ambassador further commented : 

“President Chiang has been thinking very earnestly both over the 
situation as he is compelled to recognize its realities and over advice 
given him which, so far as I can gather, has all been very much to the 
same effect. In general, this is that the demand for peace is wide- 
spread and insistent, and the Government should be able either to per- 
suade the Communists to stop fighting and resume peace discussions or 
to place the responsibility for continuing the civil war upon them, 
and furthermore that the Government should win back popular con- 
fidence by official statements calculated to keep the people much better 
informed than they have been hitherto of the problems and intentions 
of the Government. In my personal conversations with President 
Chiang I have been as frank as seemed permissible and have been 
cheered especially during the latest interview by what seemed to be on 
his part something more than a general assent in principle.” 

The Ambassador also observed : 

“Actually much of the apparent strength of Chinese Communism 
is due chiefly to the inefficiency and corruption of the Kuomintang 
and — w ith an alarming acceleration — to popular loss of faith in the 
Government. One can be reasonably certain that with sufficient evi- 
dence of competent statesmanship and determined moral reforms the 
Government could recover its hold alike on the intellectuals and the 


The same struggle for power and the intra-party rivalry which 
was hampering the National Government was vitally affecting the 
Government’s position in Manchuria. During the latter half of June 
the Consul General at Mukden reported as follows : 

“Rivalry (if not enmity) between General Hsiung Shih-hui, the 
Generalissimo’s representative, and General Tu Li-ming, Command- 
ing the Northeast Combat Command, is openly discussed and the 
absence of closely integrated military and economic planning is at- 
tributed to it.” 

The Consul General also described the attitude of Chinese Govern- 
ment representatives in Manchuria and the effect upon the Govern- 
ment as follows : 

“Nationalist southern military forces and civil administrators con- 
duct themselves in Manchuria as conquerors, not as fellow country- 



men, and have imposed a ‘carpet-bag’ regime of unbridled exploita- 
tion on the areas under their control. 55 

He continued that the result was to make the local populace in the 
countryside so antagonistic toward outsiders as to affect the morale 
of non-Manchurian troops and at the same time arouse vindictiveness 
in southern military officers and civil administrators. Commenting 
on the food problem at Mukden the Consul General said : 

“Puerile efforts have been made toward price control and to com- 
bat hoarding, but in general, the results of these efforts have been 
largely to enforce requisitioning of grain at bayonet point for con- 
trolled prices and enable the resale of requisitioned grain at black 
market prices for the benefit of the pockets of rapacious military and 
civil officials. 55 

It was thus inevitable that, as reported by the Consul General: 

“Evidence is growing daily that the people of Manchuria are not 
only prepared for but are keenly desirous of a change in government. 
But what change? Most are undecided even though voluble in dis- 
content of the present way of living and the trend of events. It is safe 
to state that the overwhelming majority in the nation are dissatisfied 
with, dislike and would welcome freedom from the present National- 
ist regime. 5 ’ 

When on June 19 the Generalissimo summoned the Ambassador 
and, after describing to him his estimate of the seriousness of the 
situation in Manchuria, asked for the Ambassador’s opinion, Dr. 
Stuart made the following reply : 

“I replied that it might be that the time had come for him to take 
emergency measures such as organizing a small but carefully selected 
group to work with himself, men respected by all and able to take 
responsibility as well as to form a team ; to reduce expenditures by -at 
least discontinuing all measures not needed for the emergency period ; 
to make an announcement to the people that if the Communist Party 
finally refused the latest peace proposals the people of the country 
should hold them responsible; if they wished to preserve the demo- 
cratic way of life as to be effected soon under constitutional govern- 
ment they should all work together to save the nation from the threat- 
ened danger ; to this end all should work for the common purpose and 
contribute what they could of service or wealth; the Government 
should, respecting civil liberties, carry out the most immediate reforms 
with the courage and ruthless impartiality required by the crisis and 



in all such ways win back popular support or ask to be relieved of the 
task ; that I had always believed that such a revolutionary program 
would attract the thinking people, especially students and other sup- 
posed leftists; that he should allocate responsibility (for instance, 
military affairs) with a minimum of red tape, and himself tour the 
country making speeches and arousing the populace to rally to the 
new movement ; that with the people behind him he need not fear the 
Communist military strength nor their other activities and should con- 
tinue to keep the door wide open for a resumption of peace negotia- 
tions; that hopelessness and defeatism were paralyzing those who 
wanted to do something for the nation but under some such deter- 
mined, progressive leadership they could be inspired to new hope and 
effort ; and finally that I felt sure such a program would win abundant 
sympathy in America and elsewhere over the world. At the end, he 
said that he had been thinking along very much the same lines.” 


In the face of a situation calling for the most resolute and clear- 
sighted action, the powerful Standing Committee of the Central Ex- 
ecutive Committee of the Kuomintang on June 30 held an extraordi- 
nary and previously unannounced session to discuss general Party 
policy. After five hours of discussion, the Committee adopted three 
resolutions: (1) to continue and expand the “punitive action against 
the Communists”; (2) to draw up and put into effect plans for inte- 
grating the San Min Chu I Youth Corps into the Kuomintang; and 
(3) to set in motion preparations for the fall elections. Such inade- 
quate measures at this critical time would have been farcical had they 
not been so tragic in their implications of a lack of driving force and 
determination to see the civil war through to a successful conclusion. 

There was, however, apparently an awareness of the need for drastic 
action on the part of the National Government, as indicated by the 
resolution on general national mobilization passed by the State Coun- 
cil on July 4, which stated, inter alia: 

“It is proposed that the State Council order a national general 
mobilization and encourage the people to help in its execution. Plans 
concerning the acceleration of economic reconstruction, the reform 
of local governments, the mobilization of manpower and resources, 
the improvement of food and conscription administrations, the main- 
tenance of social order, the mitigation of the people’s sufferings, the 
protection of their basic rights, the practice of thrift, the increases 
of agricultural and industrial production, and the amelioration of 



the treatment of officers and men shall be carefully drafted by the 
competent authorities and enforced in accordance with law. The 
competent authorities shall also be instructed to guard against abuses 
in the execution of those plans.” 15 

This awareness was also reflected in statements made at this time by 
the Generalissimo and General Chang Chun, the Prime Minister. In 
an address to the nation on July 6 the Generalissimo said : 

“Simultaneously, we must exert all-out efforts in effecting national 
reforms and improvements. While we are suppressing the Communist 
brigands with military means, the nation must also at the same time 
effect internal reforms.” 

The President admitted 

“that the Government in itself is not perfect while in the body of the 
Chinese society also are found many weak points, made all the weaker 
by the Communist rebellion. But, however difficult it may be for 
the nation to accomplish its goal, reforms and improvements must be 

The official Central News Agency gave the following account of 
General Chang Chun’s statements on this same subject in a press 
interview on July 5 : “During the period of national general mobiliza- 
tion, the Government will see that all orders are faithfully and 
promptly carried out,” he said. “Government officials should win the 
confidence and cooperation of the people and coordination among 
various Government departments should be further strengthened. 
Corruption and delinquency among Government officials and armed 
forces should be wiped out,” General Chang emphasized. 1511 

The Generalissimo again reflected this increasing awareness of cur- 
rent needs in his radio broadcast on July 7, the tenth anniversary of 
the beginning of Sino- Japanese hostilities : 

“Unless drastic reforms are introduced, China may not be able to 
exist in the family of nations. Therefore, political, educational, eco- 
nomic and social reforms, which should be made, shall not be delayed 
until the conclusion of the suppression campaign, but will be initiated 
right away. ... It was for the purpose of concentrating our efforts 
to effect an over-all reform and remove all obstacles in the way of 
national reconstruction that national general mobilization was 
ordered.” 16 

” See annex 129. 

15 * See annex 130. 

” See annex 131. 



The resolution on general national mobilization adopted by the 
State Council on July 4 also proclaimed the Chinese Communists to 
be in open rebellion against the National Government and demanded 
that the resources of the country be devoted to their suppression. 
This part of the resolution was reinforced by statements issued 
shortly thereafter by the Generalissimo and the Prime Minister, Gen- 
eral Chang Chun, in which it was emphasized that the Government 
was determined to carry out and make effective the national mobiliza- 
tion and suppress the Chinese Communist rebellion. It is interesting 
to note that the Generalissimo said, “We have never attempted to 
castigate Communism as a theory or idea. . . . The Government was 
willing to give full consideration to their opinions, but no peace talk 
no mediation — has succeeded in dissuading the Communists from stag- 
ing a rebellion.” 

Thus ended a long chapter in Kuomintang-Communist relations, 
begun in 1937, during which there had been alternate periods of 
negotiations and military clashes. The Chinese Government had now 
abandoned its previous publicly expressed policy of seeking to solve 
the Communist problem by political means and was proclaiming the 
Chinese Communists to be rebels against the Government’s authority 
who were to be suppressed by military force. 

On July 19, the Central News Agency published the text of “The 
Outline for the Implementation of Mobilization to Suppress Rebellion 
and Complete Constitutional Government,” which was adopted by the 
State Council on July 18, to become effective immediately. Its 18 
articles were general in scope but provided an adequate framework 
if the Government should succeed in implementing them effectively. 17 


On July 6, Ambassador Stuart had delivered to the Generalissimo 
a message from Secretary of State Marshall, as follows : 

“We have been following closely the situation in China and are 
perturbed over the economic deterioration resulting from the spread 
of hostilities. We are keenly aware of China’s needs and the Genera- 
lissimo is thoroughly familiar with the general tenor of my ideas. I 
cannot presume in my position to offer advice as to how he should 
deal with the specific situation in Manchuria. In all frankness I must 
point out that he was forewarned of most of the present serious diffi- 
culties and advised regarding preventive measures. 

17 See annex 132. 



“In the final analysis the fundamental and lasting solution of China’s 
problems must come from the Chinese themselves. The United States 
cannot initiate and carry out the solution of those problems and can 
only assist as conditions develop which give some beneficial results. 
Please assure the Generalissimo of my continued deep personal con- 
cern over events in China and of my earnest desire to find ways of 
being helpful.” 

In transmitting this message to the Generalissimo, Ambassador 
Stuart stressed his confidence that the United States wished to assist 
and strengthen China as a free nation, but pointed out that it was a 
most difficult task to decide upon an effective kind of aid and methods 
by which it might be rendered. The Ambassador further said that 
military aid alone would not lead toward the type of development in 
China which the United States held essential for China’s own good. 
The Generalissimo informed Dr. Stuart that he thoroughly understood 
the meaning of the message, that he had heard these points from 
General Marshall when he was in China and that he was grateful for 
this renewed expression. 

In reply to the Generalissimo’s inquiry as to the Ambassador’s 
interpretation of the message, Dr. Stuart said that he had many times 
outlined to the Generalissimo the type of adjustments which were 
considered prerequisites to a more positive policy and assistance on 
the part of the United States. He said that the type of change which 
he had in mind centered around basic reform through constitutional 
institutions within the body of the Government, including the dele- 
gation of more authority, the establishment and visible maintenance 
and protection of civil liberties, and the actual development of a more 
intimate working relationship between the Government and the people. 
Dr. Stuart stated that the State Council’s general national mobiliza- 
tion resolution had in some of its parts certain of the ideas for reform 
which his Government thought were so necessary, but that there was 
no assurance that this new order would mean more than many which 
had previously been issued. The Ambassador again emphasized the 
need for drastic over-all reform. The Generalissimo replied that he 
understood what was meant and that he would undertake to do some- 
thing along these lines as soon as possible. 


Following a brief trip to Peiping, the Ambassador on July 15, at 
the request of the Generalissimo, described to him conditions in North 


China and Manchuria as he found them. His report of these observa- 
tions to the Generalissimo is as follows : 

“Independent Chinese and American reports from Manchuria agree 
that conditions are extremely serious not merely from a military point 
of view but because of the hostility of the people alike toward Commu- 
nists and the Central Government. Military officers of the Central 
Government of all ranks are exploiting the populace, enriching them- 
selves, and consequently there are stirrings of separatist feelings. I 
said that it was my strong opinion that reliance on trusted local leaders 
with a large measure of autonomy would strengthen the Government 
position and neutralize Communist success in using these same methods. 

“I said I found the north China people somewhat relieved because 
temporary Government gains in Manchuria removed immediate 
threat, but discontent was almost as intense as in the northeast. This 
discontent seemed generally true throughout the country and was 
becoming rapidly intensified. 

“The Generalissimo remarked that economic conditions accounted 
largely for this, to which I replied that fiscal and economic deteriora- 
tion was more a symptom and that it was the general feeling of hope- 
lessness and impending disaster that led to increasing military graft, 
especially in Manchuria. In short, war weariness and increasing fore- 
bodings were paralyzing military efforts. I smilingly charged the 
Generalissimo with having used in his latest statement my own lan- 
guage about a new revolution but without my emphasis on reform 
and constitutional liberties, restricting his own statement in effect 
to one of fighting Communists. The Generalissimo agreed somewhat 
more heartily than usual with my statements and admitted that others 
could see developments sometimes more clearly than he and asked 
that I draft specific suggestions. In this latter connection I am taking 
no action for the time being.” 

On August 11, Ambassador Stuart again repeated his plea to the 
Generalissimo that radical reforms be undertaken. 18 On August 19, 
in a report on the situation, 19 Dr. Stuart spoke of the growing number, 
both within the Government and outside it, who admitted the logic 
of the pleas that the Chinese should adopt self-help measures and 
put their own house in order, but who felt utterly impotent in view 
of the conservatism, feudalistic ideas, selfishness, narrow prejudices 
and similar limitations prevalent among those who had the power 
to effect reforms. He also said that while the signs of willingness 

18 See annex 139. 

36 See annex 140. 



and ability to institute progressive reforms were still sadly lacking 
there were some such signs. 

Following a brief visit to Peiping, the Ambassador reported to 
the Department on September 8 his impressions of conditions in 
North China as follows : 

“The prevailing attitude of students, is ’. . . quite revealing, 

especially when they are thought of as a rough register of the trend 
in public opinion. In both Tsing Hua and Yenching Universities 
the anti-Communist element is reported as certainly 90% and more 
probably 95%, and the anti-Kuomintang-Government proportion as 
fully 90%. In the University of Peiping, Government sympathizers 
claim that the percentage opposed to the present administration is 
much lower. My guess would be that these figures are a fair index 
of student thinking generally over the country. The obvious con- 
clusion would seem to be that the people — even the more radical and 
immature — are instinctively against Communism and could easily 
be won to support a truly reformed National Government. Among the 
students Chiang Kai-shek, as the symbol of Kuomintang rule, has 
lost greatly in esteem. To most of them he is frankly finished. 

“Another impression is the extent to which Soviet inspired litera- 
ture is being read by students and the unthinking way with which 
they accept and quote assertions, about the United States for instance, 
which are palpably untrue. If we are to undertake a program of 
active assistance to China I earnestly hope that it will be accompanied 
by provision for carefully planned publicity. 

“Conditions in Communist controlled territory are described to 
me as follows. The more intelligent country people live not so much 
in actual discontent or hardship as in fear of what might happen to 
them at any time. The others accept relative economic insecurity 
and the regulations imposed on them rather passively. The children 
are growing up with more or less enthusiasm for the existing regime 
and are taught to believe all that is evil of the National Government 
and America. The situation is still somewhat plastic but will become 
fixed with time. There is general agreement that better local admin- 
istration with complete assurance that there would be no danger of 
the certain reprisals if the Communists came back would result in a 
welcome for the National Government. Economic distress is widely 
prevalent but there is food for everyone. 

“There is great satisfaction in North China over the appointment 
of General Chen Cheng to supreme authority in Manchuria and the 
dismissal of Hsiung Shih-hui. The purging of army officers and other 
reforms, as reported in the local press, have made a fine impression. 


“Marshal Li Tsung-jen is gaining in public confidence. There 
seems no reason to credit rumors of his disaffection toward the Na- 
tional Government. Governor Sung Lien-chung complains — as 
usual — of having insufficient troops under his command to cope with 
the Communists in Hopei. The Mayor is working diligently to arouse 
interest in the coming elections and has drafted college professors and 
others to visit the different precincts of the city and give lectures on 
the subject. But he is discouraged by the small numbers registering 
for casting ballots. It is not clear how much of this apathy is due to 
fear and how much to indifference or ignorance.” 



While the situation continued to deteriorate and popular discontent 
with and criticism of the Government increased, the Chinese Govern- 
ment seemed incapable of taking, or unwilling to take, effective steps 
to meet the serious problems confronting it. There seemed to be 
rather a feeling of apathy, defeatism and spiritual bankruptcy which 
led inevitably to a complete psychological dependence upon external 
aid as the sole means of solving China’s problems with little regard 
to the realities of a situation in which Chinese efforts and measures 
of self-help were the essential and basic need. 


In view of these circumstances, the President on July 9, 1947, pur- 
suant to the recommendation of the Secretary of State, instructed 
Lieutenant General Albert C. Wedemeyer to proceed immediately to 
China and Korea on a fact-finding mission. This decision was 
announced on July 11. 

The President instructed General Wedemeyer to 

“proceed to China without delay for the purpose of making an ap- 
praisal of the political, economic, psychological and military situa- 
tions — current and projected. In the course of your survey you will 
maintain liaison with American diplomatic and military officials in the 
area. In your discussions with Chinese officials and leaders in posi- 
tions of responsibility you will make it clear that you are on a fact- 
finding mission and that the United States Government can consider 
assistance in a program of rehabilitation only if the Chinese Govern- 
ment presents satisfactory evidence of effective measures looking 
towards Chinese recovery and provided further that any aid which 



may be made available shall be subject to the supervision of repre- 
sentatives of the United States Government. 

“In making your appraisal it is desired that you proceed with de- 
tachment from any feeling of prior obligation to support or to further 
official Chinese programs which do not conform to sound American 
policy with regard to China. In presenting the findings of your mis- 
sion you should endeavor to state as concisely as possible your estimate 
of the character, extent, and probable consequences of assistance which 
you may recommend, and the probable consequences in the event that 
assistance is not given.” 


The reaction in China was mixed. Dr. Wang Shih-chieh, Minister 
for Foreign Affairs, expressed the views of his Government as follows : 

“The Chinese Government as well as President Chiang Kai-shek 
welcome the appointment of General Albert C. Wedemeyer as special 
envoy representing the President of the United States on a fact-finding 
mission to China and Korea. He is a staunch old friend of China. 
When he served in the China theatre during the latter part of the war, 
his contributions to Sino- American collaboration and his achievement 
in strengthening the China theatre were widely appreciated. 

“It is my belief that his coming visit will vastly facilitate a more 
complete understanding of the Chinese situation by the American 
people, further strengthen Sino- American friendship and coopera- 
tion and be conducive to general stabilization of the situation in the 
Far East.” 

The Chinese Government believed that General Wedemeyer ’s mis- 
sion would result in immediate and substantial economic and military 
aid. For the same reason, liberal and opposition groups were skeptical 
of the mission, fearing that aid would only prolong the civil war. 
Chinese Communist reaction was bitterly hostile. 


During the month that General Wedemeyer and his mission re- 
mained in China they visited the principal centers of the country and 
talked with a very large number of people, both in and out of the Gov- 
ernment, and representing all shades of opinion and interests, as well 
as with American and other non-Chinese businessmen and officials. On 
August 22, in accordance with the Generalissimo’s suggestion, General 
Wedemeyer delivered an address to a joint meeting of the State 
Council and all the Ministers of the National Government, at which 
the Generalissimo and Madame Chiang and the American Ambassador 



were also present. In this address he was strongly critical of the mili- 
tary effort of the Government and of the corruption and inefficiency 
prevalent in its ranks. He said in substance that the National Gov- 
ernment could not defeat the Chinese Communists by force but could 
win the loyal, enthusiastic and realistic support of the Chinese people 
only by improving the political and economic situation immediately. 
He stressed that the effectiveness and timeliness of these improvements 
would determine whether the National Government would stand or 
fall. 20 Although the General prefaced and concluded his remarks with' 
expressions of genuine friendship for China, Ambassador Stuart 
reported that those present at the gathering, predominantly of the 
old scholar class, generally regarded the remarks as offensive. Presi- 
dent Chiang was also apparently offended and, in bidding the General 
farewell, chided him for allegedly refusing to see certain groups of 
substantial persons in the cities visited. General Wedemeyer, how- 
ever, protested his desire to see as many different types as his schedule 
permitted. President Chiang also renewed his request that the Gen- 
ral provide him with a list of names of Chinese with large financial 
holdings abroad, but General Wedemeyer felt that since the names had 
been given him in strictest confidence, he would have to refuse. 

General Wedemeyer reinforced his views by a statement issued 
at Nanking on August 24 at the time of his departure from China: 

“In China today I find apathy and lethargy in many quarters^ In- 
stead of seeking solutions of problems presented, considerable time 
and effort are spent in blaming outside influences and seeking outside 

“It is discouraging to note the abject defeatism of many Chinese, 
who are normally competent and patriotic and who instead should be 
full of hope and determination. 

“Weakened and disrupted by long years of war and revolution, 
China still possesses most of the physical resources needed for her 
own rehabilitation. Recovery awaits inspirational leadership and 
moral and spiritual resurgence which can only come from within 
China. . . . 

“ . . . the existing Central Government can win and retain the un- 
divided, enthusiastic support of the bulk of the Chinese people by re- 
moving incompetent and/or corrupt people who now occupy many 
positions of responsibility in the Government, not only national but 
more so in provincial and municipal structures. 

“There are honorable officials who show high efficiency and devo- 
tion to duty, who strive to live within ridiculous salaries and such 

30 See annex 133. 



private means as they possess, just as there are conscientious business- 
men who live up to a high code of commercial ethics. But no one will 
misunderstand my emphasis upon the large number whose conduct 
is notoriously marked by greed, incompetence or both. 

“To regain and maintain the confidence of the people, the Central 
Government will have to effect immediately drastic, far-reaching 
political and economic reforms. Promises will no longer suffice. 
Performance is absolutely necessary. It should be accepted that mili- 
tary force in itself will not eliminate communism.” 21 


The reaction in China to General Wedemeyer’s statement of August 
24 was in general unfavorable except among the liberal opposition 
groups. Typical of the reaction was an interview given by the 
Prime Minister to the United Press in which he charged that Gen- 
eral Wedemeyer had failed to understand the situation in China and 
had not impartially sought his information. 22 The announcement 
of General Wedemeyer’s Mission had led to expectations of imme- 
diate aid and the effect of his speech to the State Council meeting 
and his parting statement had served to dispel hopes of sub- 
stantial assistance and had in turn caused resentment. The Chinese 
Communists, apparently fearful of American aid, were also bitter 
and in a broadcast of August 28 attacked General Wedemeyer in 
strong terms. 23 

Ambassador Stuart reported that on August 25, his own personal 
secretary, Philip Fugh, had been quizzed by the Generalissimo re- 
garding the background of the Wedemeyer Mission, as to why it was 
regarded as necessary, and whether it meant that the United States 
wished to force his (Chiang’s) retirement or removal. This inquiry 
may have been prompted by General Wedemeyer’s reference to the 
need for “inspirational leadership” in China. Ambassador Stuart 
concluded that the General’s talk had been a “rude shock to the Chinese 
Government,” but he felt that “most politically conscious non-parti- 
san and liberal Chinese undoubtedly largely endorse all that the 
Mission has said.” 24 

General Wedemeyer was seriously concerned at the reaction to his 
final press statement and to his talk before the State Council. A letter 
which he wrote to the Ambassador on August 30 indicated his surprise 
at the reaction : 

21 See annex 134. 

22 See annex 136. 

23 See annex 137. 

* For full text of the Ambassador’s report, see annex 141. 



“The members of my mission and I have carefully perused the 
Chinese and American reaction to our final press statement. You 
know and the Generalissimo should know that the objective was to 
assist him in instituting reforms and reorganizing his government to 
facilitate economic and political stability. You can reassure him that 
all the members of my mission are friendly to China. 

“As far as the reaction to my talk before the State Council and 
the Ministers is concerned, the Generalissimo asked me to make this 
talk and urged complete frankness. The Generalissimo’s Secretary 
strongly reiterated that the Generalissimo wanted a frank appraisal 
of my observations. You personally confirmed my hope when we 
were returning from the talk that my frank appraisal was sorely 
needed and was well received. You added that my statements were 
made courteously and with due regard for the sensibilities of those 
venerable officials who were present. 

“The members of my Mission again join in thanking you and the 
members of your staff for the assistance and courtesies they received.” 

General Wedemeyer on September 8 repeated his concern over the 
reaction in a letter to the Secretary of State as follows : 

“Reference is made to Ambassador Stuart’s resume of my talk to 
assembled Chinese officials, including the Generalissimo, members of 
State Councils, and Ministers. The Generalissimo strongly and re- 
peatedly urged this talk and Ambassador Stuart concurred. At the 
conclusion the Ambassador stated that if my Mission served no other 
useful purpose, the value of the talk fully justified the presence of the 
Mission in China. I was particularly careful in presenting the data 
in a courteous manner in order not to offend the finer sensibilities of 
the venerable gentlemen and high officials present. I emphasized 
that I made the talk upon the repeated request of the Generalissimo 
to whom I had previously related observations. I refrained meticu- 
lously from any hint or suggestion concerning my conclusions or pro- 
jected recommendations. This visibly piqued and disappointed Chi- 
nese officialdom. I prefaced the talk with the statement that I was 
appearing before the assembled officials as a friend and not as a Presi- 
dential envoy. My action requires no defense or apology. However, 
the above information appears pertinent in the light of Ambassador 
Stuart’s messages concerning the subject and also in view of both fa- 
vorable and unfavorable Chinese reactions.” 

Prior to his departure the Chinese Government had handed Gen- 
eral Wedemeyer a memorandum setting forth an account of Kuomin- 
tang accomplishments in the thirties, a justification of the Government 
position and a reaffirmation of the Government’s determination to 



see the civil war through to a successful conclusion. In this memoran- 
dum the Government claimed that it had already undertaken most 
of the internal reforms recommended by the United States. 25 


Following a brief visit to Korea, General Wedemeyer returned to 
Washington and on September 19 presented his confidential report 
to President Truman. 26 

The controversy in the United States surrounding this Report arose 
largely from the fact that the United States Government did not make 
it public. The President had originally requested this appraisal of the 
situation in China for his own guidance and that of the Secretary of 
State and not for public use. General Wedemeyer’s analysis of the 
situation in China was in general similar to that submitted to the De- 
partment of State in numerous reports by the American Embassy and 
American consular officers in China and by General Marshall himself. 
Among the recommendations of the Report, however, was one require- 
ing immediate action by the United Nations to place Manchuria 
under a Guardianship of Five Powers including the Soviet Union, 
or a United Nations Trusteeship. It was the conviction of the Presi- 
dent and the Secretary of State that any such recommendation, if 
made public at that time, would be highly offensive to Chinese suscep- 
tibilities as an infringement of Chinese sovereignty, and representing 
the Chinese Government as incapable of governing Chinese territory. 
It was also believed that it would no doubt be rejected by the Chinese 
Government as it would in a sense represent at least a partial aliena- 
tion of Chinese territory to a group of powers including the Soviet 
Union. In any event, they believed that to place upon the United 
Nations responsibility for action to implement such a recommendation 
might well seriously endanger the future of that organization, which 
at that time was already confronted with other grave and pressing 
problems. The Generalissimo was confidentially advised by the Secre- 
tary of State of the impediments this recommendation had placed in 
the way of the publication of the Report, and vouchsafed no comment. 

The Wedemeyer Report recommended in general that the United 
States provide military and economic aid to China under a program 
of assistance over a period of at least five years requiring Congres- 
sional authorization. It also provided for financial assistance to 
China for reconstruction projects and eventually for currency stabili- 
zation, while at the same time recognizing : “The present fiscal situa- 

28 See annex 138. 

2a See annex 135 for full text of those portions of the Wedemeyer Report dealing 
with China. 


tion is inopportune for the introduction of a new currency or the 
adoption of even an intermediate step towards stabilization.” 

The Report indicated that improvement of the economic situation 
through American aid should open the way for further constructive 
support in the future from existing agencies, such as the Export-Im- 
port Bank, the International Bank and Monetary Fund and private 
Chinese and foreign capital. In its military phases the Report recom- 
mended that military advice and supervision be extended in scope to 
include field forces, training centers and particularly logistical agencies, 
but it recognized the desirability of avoiding direct United States in- 
volvement in the civil war by indicating : “Although advice indicated 
above does provide advice indirectly to tactical forces, it should be 
carried on outside operational areas to prevent the criticism that 
American personnel are actively engaged in fratricidal warfare.” 

In addition to the stipulations regarding action by the United Na- 
tions, reference to which has been made previously, the Report 
recommended other stipulations as precedent to United States aid : 

“That China make effective use of her own resources in a program 
for economic reconstruction and initiate sound fiscal policies leading 
to reduction of budgetary deficits. 

“That China give continuing evidence that the urgently required 
political and military reforms are being implemented. 

“That China accept American advisors as responsible representatives 
of the U. S. Government in specified military and economic fields to 
assist China in utilizing U. S. aid in the manner for which it is 



The Fourth Plenary Session of the Central Executive Committee 
of the Kuomintang opened at Nanking on September 9, 1947, with the 
announced purpose of consolidating the San Min Chu I Youth Corps 
with the Kuomintang. There was, however, much speculation that 
the Session would have a more important task. According to reliable 
information the Generalissimo in his opening address, which was 
largely a repetition of remarks he had made to the Standing Com- 
mittee the preceding June, said that for twenty years he had been 
attempting to implement the principles of Sun Yat-sen and that he 
had to admit failure but was determined to continue. But he scath- 
ingly denounced the Party for failing to solve China’s problems and 



absolved himself from all responsibility. From this point he pro- 
ceeded to charge that the members of the Kuomintang had also failed, 
that the Communists had proved themselves abler and more devoted 
and that without reform and rejuvenation the Kuomintang was 
doomed to extinction. The Generalissimo asserted that China would 
never again be dependent on the United States for assistance. He 
said that China’s policy toward Japan was in line with that of the 
Soviet Union, with which country China would have to strengthen its 
relations, while preserving its traditional tie of friendship with the 
United States. It is noteworthy that an elaborate if general program 
of reform was proposed during the Session and that it was expected to 
be adopted. At one of the final meetings, however, the Generalissimo 
demanded that the reform program be dropped and that in its place 
the Kuomintang proceed to carry out unfulfilled promises made during 
the previous two years. The final manifesto of the Fourth Plenary 
Session, published on September 13, 27 did not indicate any specific 
accomplishments of the meeting. 

On September 20 the Embassy reported its appraisal of the meeting 
to the Department of State : 28 The reported reform was believed to be 
related to the Wedemeyer Mission and to the desire to comply with 
American requirements for assistance. The consolidation of the 
Youth Corps was sought, however, in order to draw the younger 
elements into the Party, and to eliminate the growing friction between 
the Kuomintang and the Youth Corps. The consolidation achieved 
by the meeting was reportedly not very successful, and the Cen- 
tral Executive Committee accomplished very little. The Session in- 
volved a sparring for position, which might lead to a purge. The 
CC Clique emerged in a stronger position than previously, owing 
to its control of the Youth Corps and its ability to exploit internal 
and international conditions. The disappointing outcome of the 
Wedemeyer Mission played an important role in the Session, 
fcr it belied the expectations of the Government, which had expected 
substantial aid or at least specific promises from that Mission. 

In a further report on September 20 29 regarding the general situ- 
ation the Embassy pointed out that the most disheartening feature 
of the Chinese situation, in economic as well as in other fields, was 
the overt reliance upon American aid to extricate China from its 
pressing problems and a corresponding lack of self-reliance and self- 
help in meeting these problems. The political, military, and economic 
position of the Central Government was said to be continuously 

27 See annex 142. 

28 For full text of this report, see annex 143. 

29 For full text, see annex 144. 



deteriorating, and the failure of the expected assistance from the 
Wedemeyer Mission to materialize, combined with renewed Commu- 
nist military activity, was intensifying a tendency to panic. Support- 
ing the Generalissimo’s reference to the Soviet Union, thinly veiled 
suggestions were emanating from high officials of the Chinese Govern- 
ment to the effect that China might have to seek assistance from 
that country, and that the Soviet Ambassador to China might be 
asked to mediate in the civil war. Such talk was regarded as pri- 
marily for effect on the United States, and secondarily as a reflec- 
tion of a feeling of desperation among Chinese leaders. There was 
also an increasing Chinese fear that the United States was tending 
to shift the center of gravity of its Far Eastern policy from China to 
Japan. The large-scale raid of Liu Po-cheng into Anhwei and south- 
ern Honan was a matter of great concern, and the military situa- 
tion in Shantung had deteriorated. The military situation in Man- 
churia was said to be quiescent, but a sixth Communist offensive 
was thought to be imminent. The expected Communist offensive 
would probably be coordinated with one in North China. Commu- 
nist radio broadcasts had stated that the offensive to “liberate” 
China north of the Yangtze had been launched, but it was not thought 
that this objective would be attained “within the foreseeable future.” 
It was disheartening to see the Chinese reliance on the deus ex machina 
of American aid, as illustrated by the presumption that the deficit 
in China’s balance of payments would be met by the United States 
in one form or another. 

On September 27 the American Consul General in Shanghai 
reported that the CC Clique there was increasing its power and 
dominating the Kuomintang’s preparations to ensure that the suc- 
cessful candidates in the coming election were “elite party supporters 
plus such few political beggars as it may seem expedient to accept 
as window dressing.” In this connection the Consul General for- 
warded reports that T. V. Soong had made a bargain with the CC 
Clique which involved his appointment as Governor of Kwangtung 
and that H. H. Kung was presumably involved in the bargain. 
Shanghai reports also indicated that the Government’s anti-Ameri- 
canism at this time had been inspired by the right wing of the 
Kuomintang, which found it an effective method of weakening the 
Political Science group. 


Two days later, Dr. Stuart reported to the Department as follows : 

“There is not much evidence yet of success in dealing with graft, 
which is becoming more prevalent in the worsening economic situation. 



But President Chiang is at least trying to tackle the problem. The 
Control Yuan has been given considerably more authority with instruc- 
tions to exercise it in this matter. One hears constantly of those who 
have been brought to trial. An instance, which is a somewhat acid 
test for any Chinese official, is the son of an old and honored friend of 
President Chiang, now at the head of the Postal Administration but 
charged with flagrant speculation, whom President Chiang ordered 
to be punished according to law regardless of all other considerations. 

“The powers of the local police are being enlarged as part of the 
plan for eliminating or at least restricting the activities of military 
police and secret service men. . . . 

“There are not a few hard-working, public-spirited progressives 
in the Government who share our dissatisfaction with it and who 
earnestly desire for their country all that we have expressed as our 
hope for China. But their difficulties are very real. Just to mention 
one of many, the members of the two minority parties brought in to 
broaden the basis of the Government are showing themselves to be 
even more rapacious for office and its perquisites than many of the 
Kuomintang, with no improvement in administrative efficiency. 
These progressives and their many sympathizers outside would be 
immensely heartened by some indication of our intention to assist 
them and would, in my opinion, be the nucleus through which we can 
go a long way toward realizing our aims for China and for a stable 
peace in this part of the world. But they do not see much hope with- 
out such aid from us and any authoritative indication of our policy 
would be very reassuring.” 

On October 11, members of the Military Affairs Committee of the 
American 'House of Representatives who were visiting in China called 
on the Generalissimo. In answer to their questions he stated his belief 
that the Chinese Communists were thorough-going Communists, 
working in collusion with and taking orders from Moscow, and that 
they constantly received supplies from Russia. He repeated his re- 
quest for greater American aid and then said that “the predicament 
in Manchuria was an American responsibility.” In conclusion he said 
that if the Government were finally defeated it would not be because 
of Russia or the Chinese Communists, but because the United States 
had failed to give promised assistance at a time of desperate need. 

In a report to the Department on October 29, Ambassador Stuart 
found no reason to change his previous estimates. 80 

30 See annex 145. 




Additional developments concerned the minor parties. Partly as a 
result of Government pressure, and partly as an indication of dis- 
sension within its own ranks, Carson Chang’s Social Democratic Party 
was bitterly split during August and September and ended up as two 
separate groups with consequent diminution of such influence as it 
had possessed. Henceforth little was to be heard of it except for that 
faction which joined with the Government and became largely a 
rubber-stamp of the Kuomintang. 

During September and October there were increasingly frequent 
reports that the Government was planning action against the Demo- 
cratic League on charges that it was subservient to the Communists. 
Finally, on October 28, an official decree outlawed the League and 
made it subject to the provisions of the General National Mobilization 
Order of July 4. 31 

The prominent leaders of the party were not arrested and, as a result 
of negotiations between the League and the Government, the League 
on November 6 announced its formal dissolution. 32 The Government 
decree was never revoked and it was apparent that the Generalissimo 
was determined to eliminate the League from public activities. 33 


During the winter of 1947-1948 rumors of peace negotiations with 
the Chinese Communists again became current. This time the pos- 
sibility of Russian mediation was injected. On December 20, 1947, 
General Chang Chih-chung, who had played a leading role in the 
negotiations while General Marshall was in China, told the American 
Ambassador that he had recently discussed the situation with the 
Generalissimo. He had argued with the Generalissimo that the only 
solution lay in the resumption of the PCC resolutions, but the latter 
remonstrated that he could not take the initiative — though he would 
not object if General Chang made cautious inquiries. General Chang 
also told Ambassador Stuart that prior to his conversation with the 
Generalissimo he had approached the Soviet Embassy in Nanking 
for help in persuading the Chinese Communists to resume peace talks. 
He had warned the Russians that China could never be won over to 
Russia against the United States, and had insisted that in aiding 
China the United States had no ulterior motives against the Russians. 
He said the Russians seemed impressed, and in reply to their inquiry 

81 See annex 146. 

83 See annex 147. 

33 See annex 148. 



as to what they might do, he said that they might advise the Chinese 
Communists to stop fighting. 

On the other hand a statement was issued on December 25 by 
Chairman Mao Tse-tung of the Central Committee of the Chinese 
Communist Party. 34 The statement was one of triumph and confi- 
dence, as well as a series of vitriolic attacks on the United States 
as the great enemy of the world and the agent responsible for con- 
tinuing the civil war in China. 

Subsequently the private secretary to the Generalissimo confirmed 
to the Embassy that the Russians had offered to mediate in the Chinese 
situation. The secretary stated emphatically, however, that the 
Generalissimo had not given his approval to the activities of General 
Chang Chih-chung and that the Chinese Government neither desired 
nor believed possible any accommodation with the Chinese Commun- 
ists at that time. However, it was increasingly apparent during Jan- 
uary 1948 that there were elements in the Chinese Government which 
favored a political settlement. The Embassy on January 23 reported 
to the Department its belief that something might come of this trend 
in favor of negotiations because of the increasingly unfavorable posi- 
tion of the Government, and the apparent determination of the Chi- 
nese Communists to carry the fighting to Central and South China. It 
was clear that responsible Chinese Government officials were also 
concerned by this latter possibility. 

On February 6 the Ambassador found that the Chinese Foreign 
Minister was seriously perturbed over the military situation in Man- 
churia. The Foreign Minister stated that he believed the renewed 
attacks by the Chinese Communist forces on Mukden arose from the 
Chinese refusal of the Russian offer of mediation. He told the 
Ambassador that the Soviet Charge d’Affaires, acting on instructions, 
had requested protection for Russian citizens in Manchuria. When 
the Charge remonstrated that the Soviet Union had never given China 
cause for misgiving, the Foreign Minister reminded him of the be- 
havior of Russian troops after entering Manchuria in August 1945. 

On March 8 the Embassy at Nanking commented as follows on 
these and related developments : 

“There is increasing evidence that despite the announced inten- 
tion of present Government leadership to continue the civil war, 
strong opposition to this policy by civil and military officials, as well 
as by the general public, particularly the intellectuals, may soon 
become sufficiently strong to compel present leadership to abandon 
this policy in favor of negotiated peace or face the threat of being 

34 See annex 149. 


discarded. It is difficult at the moment to define precisely the scope 
of this opposition or its strength, but the fact of its existence or of 
its growth can hardly any longer be denied. The disintegration and 
decay which has characterized all phases of the Government’s activi- 
ties during the past several years continues and in recent weeks has 
been accentuated. It is increasingly apparent that the Government 
is over-extended militarily, with resulting inability to prevent con- 
tinued economic deterioration and has reached a point where its over- 
all political control is imperiled. 

“The Government now exerts only a tenuous control over approxi- 
mately one per cent of Manchuria and not more than ten or fifteen per 
cent of that part of China proper north of the Yellow River. Between 
the Yellow River and the Yangtze there are strong Communist ele- 
ments and there has been infiltration even south of the Yangtze. 
Government forces are hard pressed and on the defensive in prac- 
tically every theater. There is increased demoralization, a fatalistic 
feeling that collapse of the government is inevitable, and a decided 
trend toward regionalism; each regional leader is looking about for 
means to defend himself against the Communists when he can no 
longer call on Nanking. 

“With this alarming situation there is need for inspired leadership 
which is not forthcoming. Those in control of the government seem 
almost frantic in their search for solution, yet incapable of taking the 
necessary initiative. Increasingly, it is the Generalissimo who must 
make the decisions and he continues the slave of his past and unable 
to take the drastic measures required. He may be expected, we believe, 
doggedly to continue the fight with the idea that if worse comes to 
worst, he can withdraw to Canton where T. V. Soong is engaged in 
building a stronghold, and let regionalism again prevail. There is, 
however, likelihood that opposition within the Government may not 
permit this course of action. This opposition is well aware of the 
perils of Soviet mediation, but appears inclined to prefer such media- 
tion to a continuation of the current struggle, the only end to which 
they increasingly fear will be a Communist-dominated China. 

“Such a negotiated settlement would likely require the disappear- 
ance from the political scene of the present dominant leadership, 
including the Generalissimo. Yet, we cannot rule it out. While 
present criminally inept and wasteful strategy can postpone tempo- 
rarily the loss of major strategic points, it cannot do so indefinitely. 
By far the greater part of the Government’s military and economic 
resources have been committed to Manchuria and North China. De- 
spite the scale of this commitment it has not forced, and shows no 
sign of forcing, a decision on the Government’s behalf. Failing 



American economic aid on an impossibly large scale, failing active 
American military aid, and failing competent Chinese leadership and 
planning, there may be revolt within the ranks of the Kuomintang 
and acceptance of the Soviet offer to mediate in the forlorn hope that 
such a compromise would give a breathing spell for regrouping, con- 
solidation, and the emergence of some dynamic quality that would 
again create the will to victory now lacking. The dangers of coalition 
with Communists are well known to those in opposition. Most likely 
accommodation would, therefore, be on a purely territorial basis which 
would, in effect, be but a temporary, though perhaps prolonged, truce. 
In any case, we feel it is entirely possible that non-Communist ele- 
ments released by such event from the dead traditional hand of pres- 
ent leadership, might rally to American assistance with a complemen- 
tary possibility of the development of political, economic and spiritual 
resources, which might eventuate in stable non-Communist govern- 
ment in Central and South China.” 


In the meantime, the principal internal preoccupation apart from 
the civil war had been, as it would continue to be for the next 
six months, the elections for the National Assembly — the Assembly 
itself was to establish the first constitutional government — and the 
struggle within the Kuomintang for power. This interest was mani- 
fested in a series of political crises. Despite predictions and specula- 
tion to the contrary, the Government held the elections late in 1947 
according to schedule. In the absence of the Communists and the 
Democratic League, these elections were between the various factions 
in the Kuomintang and the two minor parties, the Social Democrats 
and the Youth Party, which had agreed to participate. For a number 
of reasons the results were slow in coming in, though there was little 
doubt as to the eventual outcome. In the end it was apparent that 
majority influence in the new National Assembly and the Legislative 
Yuan would lie with the CC Clique, the extreme right-wing faction 
of the Kuomintang. It was precisely here that the Government found 
itself confronted with an ironic situation. It was publicly committed 
to a certain proportional representation by the minor parties, but when 
the results were tabulated it was seen that practically none of the 
minor party candidates had been successful, and that they had lost to 
either the CC Clique or independent Kuomintang candidates. The 
Government was faced with the difficult and embarrassing necessity of 
persuading successful candidates to withdraw after they had won, in 
order to comply with the commitment on broadening the Government. 
This was only made possible by an ex post facto declaration that only 



those Kuomintang candidates would be considered successful who had 
prior approval of the Party. This decision was later to create difficulty 
for the Generalissimo at the spring meeting of the National Assembly, 
which decided to rebel against his authority. Even the over-all victory 
of the CC Clique would later prove, in part, illusory on a national scale. 
It also became apparent that the real strength of the CC Clique lay in 
its control over local administrations. 


Early in February there was an outbreak of disturbances in Shang- 
hai, attended by some loss of life and destruction of property. The 
discontent this time did not center in any one particular group but 
appeared to be fairly general throughout the city and to be a general 
reflection of discontent with the manner in which the Government was 
prosecuting the war and handling civil administration. Neither the 
Embassy nor the Consulate General in Shanghai believed, however, 
that these disturbances forecast any imminent over-all breakdown of 
law and order, especially in view of the determined and imaginative 
action by the mayor. They felt, rather, that the disturbances were 
more the signs of things to come. 30 



For several months prior to October 1947, the Department of State, 
together with the National Advisory Council, had been making studies 
of China’s balance-of-payments position with a view to its bearing on 
a program of further aid to China. In the latter part of October the 
Department of State began the formulation of such a program. 

In this connection several basic factors had to be taken into con- 
sideration : It was recognized that in the main the solution of China’s 
problems must largely be a task for the Chinese themselves. A United 
States program of aid to China should not be such as would place the 
United States in the position of direct responsibility for the conduct of 
the fighting in China or for the Chinese economy. The United States 
Government could not virtually take over the Chinese Government 
and administer its economic and military affairs. Any such under- 
takings would have involved the United States in a continuing com- 
mitment from which it would have been practically impossible to with- 
draw regardless of circumstances or of Chinese Government actions. 

M See annex 150 (a) and (b). 



Account also had to be taken of the heavy burden of foreign aid which 
the United States was assuming elsewhere and of the limitations on 
the extent to which American resources could be drawn upon for 
foreign aid under the peacetime organization of its economy. 

Secretary Marshall reflected these considerations when, during the 
hearings on the China aid program in February 1948, he stated that 
an attempt to underwrite the Chinese economy and the Chinese Gov- 
ernment’s military effort represented a burden on the United States 
economy and a military responsibility which he could not recommend 
as a course of action for this Government. Nevertheless, it was be- 
lieved that the United States should do what was feasible under exist- 
ing circumstances and that the proposed program of aid for China 
would, as the President stated to the Congress on February 18, 
1948, “assist in retarding rapid economic deterioration and thus give 
the Chinese Government a further opportunity to initiate the meas- 
ures necessary to the establishment of more stable economic condi- 
tions. But it is, and has been, clear that only the Chinese Government 
itself can undertake the vital measures necessary to provide the frame- 
work within which efforts toward peace and true economic recovery 
may be effective.” 

The new proposal did not call for a long-term recovery program ex- 
tending over 5 years, as recommended by General TVedemeyer. As 
Secretary Marshall stated before the House Committee on Foreign 
Affairs on February 20, 1948, “it is very necessary to have in mind 
that a proposal at the present time cannot be predicated upon a defi- 
nite termination for the necessity of such assistance as in the case of 
the European Recovery Program.” It was evident that no long- 
range recovery program could be developed until the Chinese Govern- 
ment had demonstrated its capacity to take, with substantial United 
States assistance, initial steps toward laying the basis for further con- 
structive efforts. The Department of State’s program thus called for 
aid over a 15-month period during which the Chinese Government 
would have a further opportunity to take initial steps to this end. 

With respect to the question of military aid, as recommended by 
General Wedemeyer, the Department of State’s proposed aid program, 
calling for 570 million dollars in economic assistance, was sufficiently 
large to free the major portion of the Chinese Government’s own for- 
eign exchange assets for the purchase of such military supplies as it 
might wish to obtain from foreign sources. It was not considered 
desirable that the United States embark upon a military aid pro- 
gram calling for the use of United States military advisers in combat 
areas or upon measures of military aid which would have led to United 
States military intervention in China or to direct United States in- 



volvement in China’s civil strife. For these reasons, it was considered 
that the Chinese Government’s requirements- for military materiel from 
foreign sources should be met through purchases from its own 
resources, largely freed for such use through the proposed program 
of economic aid, and that the existing United States military advisory 
groups in China would enable the United States to extend advice and 
assistance within the framework of the considerations outlined 

It was against the background of these considerations that the 
Department of State’s proposed China aid bill was presented to the 
Congress in February 1948. The Congress passed legislation author- 
izing aid for China on April 2, 1948, the title of which was the China 
Aid Act of 1948. The Department’s proposals for a program of aid 
to China and Congressional action on these proposals are described 
in greater detail in chapter VIIL 


Meanwhile the question of American policy toward China was 
again suddenly and inadvertently raised. In an interview with 
an American correspondent early in March, the remarks made 
by the American Ambassador were misinterpreted to mean that 
he favored a coalition government. Despite his clarification on the 
following day, some confusion persisted. At Secretary Marshall’s 
regular press conference on March 10, a correspondent, referring to 
Congressman Fulton’s statement before the House Foreign Affairs 
Committee that there had never been a disavowal of American policy 
favoring a coalition government in China to include the Communists 
and that this apparently was still American policy, asked the Secre- 
tary if this were so. Secretary Marshall replied that the principals, 
Chiang Kai-shek and the head of the Communist Party, Mao Tse- 
tung, had reached a partial agreement in September 1945. Then, he 
said, in November 1945 they had reached a formal agreement for a 
meeting of the Political Consulative Conference, and on December 17 
there had been another agreement between Mao Tse-tung and Chiang 
Kai-shek, the basis of it being that it was to bring all Chinese parties 
together in a discussion to endeavor to settle the problem by political 
means. On December 15 President Truman had announced his state- 
ment of the policy of the United States Government. Secretary Mar- 
shall pointed out that the terms had been expressed in very broad 
language, that is, that the Chinese should widen the basis of their gov- 
ernment and give representation on a broad basis. Asked if this were 
still our policy, Secretary Marshall replied in the affirmative, pointing 



out that it was not intended to force the Chinese to do this on the basis 
of any issues which had previously arisen. 

For the background of the correspondents, Secretary Marshall 
pointed out certain essential differences between the situation in 
China and the situation in European countries. In China a single 
party, the Kuomintang, and the Government had been practically 
identical for some time. The problem of “coalition” in the European 
sense, where various established parties exist, did not really arise in 
the Chinese situation. What did arise was the question which the 
Chinese themselves had been discussing for some time of granting 
parties other than the Kuomintang, including the Communist Party, 
some representation in at least the legislative branches of the Gov- 
ernment. Neither the Communist nor any other party except the 
Kuomintang had had any representation in the legislative branch. 
The Secretary explained that, when he was in China, the Chinese 
Nationalist Government was following a policy of settling its disputes 
with the Communists as a political matter on the basis of negotiation 
instead of using force for their suppression. He had participated as 
a mediator in these discussions. 

Since these remarks also were misinterpreted, the Department of 
State issued the following release on March 11 : 

“In view of misunderstandings that have arisen concerning the 
Secretary’s statements about China at his March 10 press confer- 
ence, it is pointed out that the Secretary referred to President 
Truman’s statement of December 15, 1945. That statement ex- 
pressed the belief of the United States That peace, unity and demo- 
cratic reform in China will be furthered if the basis of this Govern- 
ment (China’s) is broadened to include other political elements in 
the country’. The Secretary said that this statement still stands. 
When asked specifically whether broadening the base of the Chinese 
Government meant we favored the inclusion of the Chinese Com- 
munist Party, he replied that the Communists were now in open 
rebellion against the Government and that this matter (the deter- 
mination of whether the Communists should be included in the 
Chinese Government) was for the Chinese Government to decide, 
not for the United States Government to dictate.” 

On the same day, questions were put to the President at his press 
conference concerning the inclusion of Chinese Communists in the 
Chinese Government. The President was specifically asked whether 
he still supported the statement he had made on December 15, 1945. 
The President replied that this statement still stood. In answer to 



further questions, he explained that it was.not the policy of the United 
States to urge the National Government of China to take Com- 
munists into the Government, but that the policy of the United States, 
which had further been carried out by General Marshall on his mission 
to China, was to assist the Chiang Kai-shek Government to meet the 
situation with which it was confronted. He expressed his hope that 
the Chinese liberals would be taken into the Government, but stated 
that “we did not want any Communists in the Government of China 
or anywhere else if we could help it.” 



Events were now moving toward the first constitutional Assembly, 
which was to meet on March 29 for the election of the President and 
the Vice President. It was anticipated that this meeting would be a 
crucial one for the Government, and the Embassy in its reports of 
March 17 and March 31 saw nothing to warrant any optimism. 36 
Practically the entire time and attention of prominent members of 
the Government during these days were taken up with the struggle for 
allocation of seats in the Assembly and, subsequently, in the jockeying 
for position over the election for President and Vice President. The 
struggles reached such extremes that at one point certain disappointed 
aspirants to the National Assembly staged a hunger strike at a Nan- 
king hotel. Actions such as this at this desperate point in the history 
of the Government only served to increase dissatisfaction with and 
criticism of the Government and, in particular, the Generalissimo. In 
answer to this criticism the Generalissimo made it clear that he would 
not accept the office of President. He offered to serve his country in 
any other capacity but it was known that he was considering the 
presidency of the Executive Yuan and would allow the office of Presi- 
dent to become similar to that of the President of France. Early in 
April, he instructed the Party to vote for Dr. Hu Shih, the distin- 
guished Chinese scholar and former Ambassador to the United States, 
as President, and Dr. Sun Fo, son of the founder of the Republic, as 
Vice President. The immediate reaction was an almost unanimous 
demand in the Assembly that the Generalissimo reverse his position 
and accept the office. Bowing to the popular will which acclaimed 
him as the only possible choice, he accepted. This resulted in a great 

38 See annex 151 (a) and (b). 



increase in his prestige, though not sufficient to enable him to impose 
his will in the vice-presidential election. 

The three leading contenders for the Vice Presidency were Dr. Sun 
Fo, who was the choice of the Generalissimo; General Ch’eng Chien, 
one of the oldest and highest ranking generals of the army and Gov- 
ernor of Hunan ; and General Li Tsung-jen, a member of the Kwangsi 
Clique and for many years one of the most prominent members of the 
Kuomintang. General Li had staged a highly successful campaign 
and had succeeded in rallying around himself most of the liberal and 
other elements in the Assembly strongly desirous of reform and 
changes in the Government. Resolution of this conflict required many 
days of political juggling and several ballots, but in the end General 
Li won, despite all the pressure which the Generalissimo brought to 
bear on recalcitrant members of the Assembly. Immediately fol- 
lowing this election there was widespread hope that a genuine and 
inspired reform movement would now arise to bring about those 
changes which all agreed were necessary if the National Government 
were to avoid disaster. In time, however, it became apparent that 
nothing of the sort would happen. 

General Li himself took no action, despite all rumors, and claimed 
that he could do nothing because the Generalissimo still controlled the 
Party machine, Government finances, and the army. It was typical 
of the manner in which the Generalissimo set about disciplining the 
Party rebellion that at the Presidential inauguration the newly-elected 
Vice President was left entirely in the background, and when the 
Presidential party drove off after the inaugural ceremonies he was 
ignored. These developments did not augur well for the future of 
unity in prosecuting the war against the Communists, and the hopes 
aroused by the election of General Li on what was, in effect, a popular 
movement for change and reform, were soon shattered . 37 


The struggle for power within the Kuomintang was carried over 
into the search for a new Prime Minister and Executive Yuan. The 
names most prominently mentioned for the premiership were those of 
General Ho Ying-chin ; the incumbent, General Chang Chun ; Dr. T. V. 
Soong; and the Foreign Minister, Dr. Wang Shih-chieh. The Gen- 
eralissimo appears to have favored General Ho but refused to meet 
his conditions. In the end the compromise selection was Dr. Wong 
Wen-hao, an eminent geologist, chairman of the National Resources 
Commission, and a man of unquestioned personal integrity, but totally 
without political following. It was apparent that the new Govern- 

87 See annex 152 (a)-(n). 



ment was composed of loyal followers of the Generalissimo and that 
he would continue to have the final word on all decisions. Public 
reaction to the new Government was generally unfavorable and the 
preliminary reports of the Government and the Legislative Yuan gave 
little hope for confidence. 38 

The Ambassador reported to the Department on June 24 as follows : 

“The crucial problem is still the personality of President Chiang. 
He is fully cognizant of the current deterioration. He listens patiently 
to warnings as to the inevitability of disaster unless new policies are 
adopted and to suggestions regarding these. He seems sincerely de- 
termined to act in accordance with the theory of his new office and 
under constitutional procedure. But there is actually very little change 
in his methods. 

“I had been hoping that with the appointment of General Ho Ying- 
ch’in as Minister of National Defense the military operations would 
be delegated to him with real authority and that General Barr could 
work closely with him. 39 I had urged this course upon the President 
and had received his assurance of agreement provided only he were 
kept constantly informed. I had also discussed the matter more than 
once with General Ho who heartily concurred in the advisability of 
this plan and promised that he would do his best. Yet the President 
has just issued an order that all operations are to be carried out under 
instructions from him through the Chief-of-Staff — the incompetent Ku 
Chu-t’ung ! 

“General Pai Ch’ung-hsi had been relieved of his post as Minister of 
National Defense, presumably for helping in the election of Li Tsung- 
jen. He was then offered the important task of commanding the 
troops in the five provinces between the Yellow and Yangtze Rivers 
and after long hesitation accepted, only to learn that he would not be 
allowed to organize local militia in this area — a feature which he has 
always strongly advocated — and that certain regions, such as that sur- 
rounding the Wu Han cities, would be out of his jurisdiction. He 
thereupon withdrew his acceptance and left in disgust for Shanghai. 
The President showed no regret and remarked that this was of no 
importance. He seems suspicious that the Kwangsi Clique have 
designs against him and is thus alienating, or at least losing the effec- 
tive cooperation of, men who by every test have been loyal both to him 
and to the national cause. 

“These instances of recent happenings will seem grimly familiar to 
you. I have more than ever a sense of frustration in endeavoring to 

“See annex 153 (a)-(e). 

39 General Barr’s mission is discussed below, chapter VII. 



influence the President’s thinking. I have an easy access to him and 
am invited to say anything to him without reserve. No Chinese dares 
to say to him what many even among his closer associates are now 
thinking and they are looking to me with a pathetic expectancy. And 
yet I feel impotent to accomplish anything that helps to reverse the 
downward trend. 

“There is a very wide-spread anti-American sentiment crystallizing 
in protests against our efforts to strengthen J apan. This is being re- 
vealed by the vehement attacks upon my message to the students . 40 
It is rather puzzling to account for this phenomenon. To explain it 
as due entirely to Communist or Soviet instigation is an oversimpli- 
fication. This has of course helped to create it by skillful propaganda 
and to organize it by agents planted both among faculties and students. 
But there must be a receptive mood to have produced so general a 
response and among so many who are normally pro-American. This 
is perhaps caused in large part by a fear of Japan which began in the 
closing years of the last century and has become instinctive as well as 
deeper than we can readily imagine. It is aggravated by distorted 
reports of our activities in Japan, including those from Chinese offi- 
cial sources, by misconceptions and false inferences, by the publication 
of the Draper [report on the industrial potential and reconstruction of 
Japan] and similar reports, by the cynical assumption that we would 
not hesitate to sacrifice China in preparing for our private war with 
Russia, and of course by deliberate, unremitting and malicious propa- 
ganda. Another very real factor is the all but universal dissatisfac- 
tion with the present Government and the irrational but easily under- 
standable association of America with its existence or its failings. The 
students, more highly sensitized than other elements of the population, 
are utterly dispirited and with no proper outlet for their patriotic 
urgings. An agitation against America for restoring their old enemy 
to a position of becoming again a potential menace has a curious appeal 
under these depressing circumstances. Apart entirely from these 
forebodings and their utilization by Communist and other anti-Gov- 
ernment factions are the selfish and shortsighted commercial or indus- 
trial groups which seek to avoid Japanese competition. The extremely 
profitable and perhaps none too efficient Shanghai textile industry, for 
instance, wishes to maintain for itself the Chinese and Southeastern 
Asia markets. Thus 1 strangely enough the extreme left and crassly 
capitalistic interests unite in disapproving our intentions in Japan. 
We cannot be too careful in carrying out those intentions to give no 
slightest cause for reasonable misapprehension.” 

40 See below, p. 277. 




The students, to whose attitude Ambassador Stuart referred, made 
known their discontent in a series of riots and demonstrations which 
extended throughout the length and breadth of the country and even 
into Manchuria, wherever student groups were found. As usual, the 
disturbances began in May as examination time approached, and 
there were many who again thought that they would die down when 
the examination period had passed. But this time there was more 
substance to the agitation, and it continued with greater or lesser 
intensity deep into the summer. The students had learned the lesson 
of previous years of Government repression of their activities and 
this time, instead of attacking the Government to reveal their dissatis- 
faction with their situation, they chose to attack the Government 
indirectly by protesting American policy in Japan. In this campaign 
they were abetted by other groups who honestly or for ulterior reasons 
disapproved of that policy. By early June the anti-American dem- 
onstrations had become so violent and irrational that Dr. Stuart felt 
compelled to appeal to his long relationship with Chinese academic 
groups. He therefore on his own initiative issued a statement, 41 which 
had a sobering effect on many of those to whom it was addressed, but 
the agitators who had seized control of the movement for other pur- 
poses managed to keep the disturbances going for many weeks. With 
the passage of weeks, interest shifted to other and more pressing sub- 
jects. On August 17 the Executive Yuan issued an order forbidding 
disturbances which were calculated to give aid and comfort to the 
enemy , 41a and the movement quickly collapsed. 

During July the Embassy and the Consulates, in a series of reports 
to the Department, had outlined in some detail the situation and their 
concern with it. 42 On July 30 the Ambassador summarized his views 
as follows : 

“We can be quite certain that no amount of military advice or ma- 
terial from us will bring unity and peace to China unless indeed there 
are reforms sufficiently drastic to win back popular confidence and 
esteem. That these could even be attempted by those now in power or 
that the improvements could be rapid and radical enough to reverse 
the prevailing attitude is scarcely to be hoped for. But without this 
assurance the intention to give increased military aid ought to be 
carefully considered in all its implications. Even under the most 
hopeful conditions such aid would probably require some two years 

41 See annex 154. 

41a See annex 155. 

42 See annex 156 (a) -(d). 



or more from next January to accomplish its objective in view of the 
basic necessity of training new divisions and of recovering lost 
territory and morale.” 


In a desperate move to stem the tide of economic deterioration, the 
Government on August 19 promulgated a series of drastic reform 
measures, which are treated in greater detail elsewhere in this paper. 43 
These measures produced a temporary boost in morale in many parts 
of the country and public opinion in China initially felt that if they 
were forcefully implemented there was a chance of salvaging the 
situation. The test case was Shanghai, where the Generalissimo ap- 
pointed his son, General Chiang Ching-kuo, as economic czar. At the 
outset young Chiang gave every indication that he would carry out 
his orders ruthlessly and he announced that special privilege would 
receive no consideration. Before many weeks had elapsed, however, 
it became apparent that he was attacking vested interests stronger 
than himself. The basic fallacy of the August decrees was that they 
failed to provide the necessary and sufficient measures for a genuine 
currency reform or to take account of the conditions which had created 
the crisis. Instead, they attempted to freeze the situation by the impo- 
sition of police measures which paralyzed the economic life 
of Shanghai and other urban centers and in the end further worsened 
the situation of small and medium businessmen without appreciably 
affecting the major operators. 4311 Repression could hold the line for a 
few weeks, but as trade came to a standstill, as the note circulation 
increased and as the refusal of producers to send stocks of foodstuffs 
into Shanghai created an emergency food shortage, the artificial con- 
trols gave way to pent-up economic pressures and the tempo of 
economic deterioration reached an unprecedented rate. The military 
disasters which were about to strike served to accentuate the deteriora- 
tion. On November 1 Chiang Ching-kuo resigned. 44 

It was symptomatic of the situation that on November 4 the official 
Kuomintang organ, the Chung Yang Jih Pao , should publish an 
editorial highly critical of the Government suggesting that it might 
well learn something from the Chinese Communists. 45 

As the situation became worse for the National Government, the 
Communists in their turn not only reflected growing confidence but 
also a heightened stridency in their attacks on the United States. Fol- 

43 See p. 396. 

43a See annex 157 (a)-(c). 

44 For his statement at the time of his resignation, see annex 158. 

43 See annex 159. 



lowing a period of seeming conciliation, they returned to their former 
line that the United States was the great enemy. In so doing their 
statements came more and more to resemble the Kremlin propaganda 
line. 48 


13, 1948 

During these depressing and disastrous months the Government in- 
creased its efforts to secure additional American aid, not only through 
direct approach but also through publicity. Both the Embassy and 
the Department of State felt an increasing need to review American 
policy and to determine what, if any, changes should be made. 

On August 10 the Embassy, after reviewing the military, eco- 
nomic, and psychological factors of the situation, recommended (1) 
that “American efforts be designed to prevent the formation of a coali- 
tion government” including Communists in the light of the history of 
such coalitions in other areas of the world and that continued or 
increased support of the National Government was the best means to 
this end, although it was possibly already too late; (2) that, if the 
march of events resulted in some kind of an accommodation with the 
Chinese Communists, American “influence should be used to arrange 
a cessation of hostilities on a basis of a very loose federation with 
territorial division which would leave as large an area of China as 
possible with a government or governments free of Communist par- 
ticipation”; and (3) that, in the event of a return to regionalism in 
China, American economic aid be given to strengthen regional gov- 
ernments so as to “permit basic anticommunist Chinese characteristics 
to reassert themselves and correspondingly weaken sympathy for the 
Communists.” 47 

The Secretary of State on August 12, 1948, outlined the following 
points for the Embassy’s general guidance : 

“1. The United States Government must not directly or indirectly 
give any implication of support, encouragement or acceptability of 
coalition government in China with Communist participation. 

“2. The United States Government has no intention of again offer- 
ing its good offices as mediator in China. 

49 See annex 160. For a recent statement in this vein by Mao Tse-tung, see 
annex 120. 

4T For full text of the Embassy’s report, see annex 161. 



“Overt United States opposition to Chinese Government compro- 
mise with the Chinese Communists (or even secretly expressed 
opposition, which would likely become known) would at this junc- 
ture provide ammunition in China for propaganda alleging that 
the United States was encouraging and prolonging the civil war. It 
could also mislead the Chinese Government to expect unlimited aid 
which could not eventuate under the existing world situation and in 
any circumstances would require congressional action. Any informal 
expression of United States Government attitude toward these ques- 
tions should, at this stage of developments in China, be confined to 
the two points outlined above. You should, of course, overlook no 
suitable opportunity to emphasize the pattern of engulfment which 
has resulted from coalition governments in eastern Europe.” 

On August 13 Secretary Marshall observed : 

“While the Department will keep actively in mind the questions 
raised, it is not likely that the situation will make it possible for us 
at this juncture to formulate any rigid plans for our future policy in 
China. Developments in China are obviously entering into a period 
of extreme flux and confusion in which it will be impossible with 
surety to perceive clearly far in advance the pattern of things to come 
and in which this Government plainly must preserve a maximum 
freedom of action.” 


Toward the end of October the Embassy again pointed out the con- 
tinuing deterioration and inquired whether there had been any changes 
in Washington. To this the Secretary replied : 

“There is general agreement with your assumption that the United 
States purposes in the Far East would as in the past be best served by 
the existence of political stability in China under a friendly Govern- 
ment, and American policy and its implementation have been con- 
sistently directed toward that goal. However, underlying our recent 
relations with China have been the fundamental considerations that 
the United States must not become directly involved in the Chinese 
civil war and that the United States must not assume responsibility 
for underwriting the Chinese Government militarily and economi- 
cally. Direct armed intervention in the internal affairs of China runs 
counter to traditional American policy toward China and would be 
contrary to the clearly expressed intent of Congress, which indicated 
that American aid to China under the $125,000,000 grants 47a did not in- 

47a See chapter VIII. 



volve the use of United States combat troops nor United States per- 
sonnel in command of Chinese troops. Public statements in Congress 
by leaders of the Senate Foreign Relations Committee, which initiated 
Section 404 (b) of the China Aid Act, indicated that aid to China 
under the $125,000,000 grants must be completely clear of the impli- 
cation of the United States underwriting the military campaign of 
the Chinese Government, since any such implication would be impos- 
sible over so vast an area. 

“Our China Aid Program was designed to give the Chinese Gov- 
ernment a breathing spell to initiate those vital steps necessary to pro- 
vide the framework within which the base for economic recovery might 
be laid and essential for its survival. It was clear that in the main 
solution of China’s problems was largely one for the Chinese them- 
selves and the aid was intended to give the Chinese Government 
further opportunity to take measures of self-help. 

“The general basic considerations governing our approach to the 
China problem were set forth in my statement before the Senate For- 
eign Relations and House Foreign Affairs Committees executive ses- 
sions, a copy of which was forwarded to you. The United States 
Government must be exceedingly careful that it does not become com- 
mitted to a policy involving the absorption of its resources to an un- 
predictable extent as would be the case if the obligations are assumed 
of a direct responsibility for the conduct of the civil war in China or 
for the Chinese economy, or both. To achieve the objective of reducing 
the Chinese Communists to a completely negligible factor in China 
in the immediate future, it would be necessary for the United States 
virtually to take over the Chinese Government and administer its 
economic, military and governmental affairs. Strong Chinese sensi- 
bilities regarding infringement of China’s sovereignty, the intense 
feeling of nationalism among all Chinese, and the unavailability of 
qualified American personnel in large numbers required argue strongly 
against attempting such a solution. It would be impossible to esti- 
mate the final cost of a course of action of this magnitude. It certainly 
would be a continuing operation for a long time to come. It would 
involve the United States Government in a continuing commitment 
from which it would practically be impossible to withdraw, and it 
would very probably involve grave consequences to this nation by 
making of China an arena of international conflict. Present develop- 
ments make it unlikely that any amount of United States military or 
economic aid could make the present Chinese Government capable of 
reestablishing and then maintaining its control throughout all China. 
There is little evidence that the fundamental weaknesses of the Chinese 
Government can be basically corrected by foreign aid. These con- 



siderations were set forth in my statement in February and they are 
certainly no less true under present circumstances. 

“Despite American aid since V-J Day, including the China Aid 
Program, deterioration has continued to a point, as you say m your 
report of October 22, where the present regime has lost the confidence 
of the people, reflected in the refusal of soldiers to fight and the re- 
fusal of the people to cooperate in economic reforms. This descrip- 
tion is generally consistent with that given in previous Embassy re- 
ports and Shanghai’s report of October 21, which quotes [a high Gov- 
ernment official], a strong supporter of the Generalissimo, as saying 
that 99 percent of the people are against the Government, and Taipei s 
report of October 22 which quotes [a high official] as saying that 
unless the Government gets out of office soon the people themselves 

are about ready to throw them out. 

“In your report of May 26 you state that the present Government 
lacks the capability to halt the spread of Communism and wdl con- 
tinue to lack the capability unless, as seems unlikely, it can find the 
inspired leadership needed to rally people and restore to the Na- 
tional armies the will to fight. You also say that the Generalissimo 
cannot be expected to provide that leadership as he seems incapable of 
change and gives every evidence of intention to persist in personal 
rule which has resulted in the present sad state of affairs. 

“Furthermore, in your report of J une 14 you described the General- 
issimo’s assurance of agreement with your recommendation regarding 
the conduct of military operations by General Ho Ying-chin with 
General Barr’s close collaboration and his subsequent instructions to 
the contrary that all operations were to be carried out under the Gen- 
eralissimo’s instructions through his ‘incompetent’ Chief of Staff. 

“Your report of June 22 states that it would appear that the Gen- 
eralissimo’s predisposition to appoint his old and personally trusted 
comrades, regardless of their proven corruption or lack of ability, to 
posts of responsibility still outweighs his desire for good government. 

“Your report of August 10 states there is no longer faith that the 
present Government can bring a return to an even bearable standard 
of living without some radical reorganization ; that without the Gen- 
eralissimo disintegration seems inevitable, yet long experience with 
him suggests that he is no longer capable of changing and reforming 
or discarding inefficient associates in favor of competent ones; that 
one would expect the Government to clutch at any means of improving 
the situation but it ignores competent military advice and fails to take 
advantage of military opportunities offered, due in a, large part to the 
fact that the Government and the military leadership continue to de- 
teriorate as the Generalissimo selects men on the basis of personal re- 


liability rather than military competence ; and that there is awareness 
of the desperate military situation yet no evidence of the will or cap- 
ability to cope with it. 

“In your report of August 20 you state that General Barr’s advice 
to the Generalissimo on specific problems arising from the conduct of 
current military operations has in general been ignored and that the 
grave difficulties encountered by General Barr in the accomplishment 
of his mission originate entirely in the failure of the Chinese high 
command to perform its functions. 

“In your report of August 10 you state we must recognize that the 
present Government or any anti-Communist Chinese combination can 
scarcely be expected to completely eliminate the Communist menace 
by military or any other means. 

“Your report of October 16 states that there are not many Chinese 
who continue with conviction to support the Generalissimo except his 
immediate followers and certain ranking military officers, and that 
the Government, but especially the Generalissimo, is more unpopular 
than ever and is increasingly denounced. You also say that it is dif- 
ficult to see at this late date how any efforts on our part, short of armed 
intervention on a very large scale, can avert further military disaster, 
with the likelihood that coalition in some form will result. 

“In your report of October 22 you say ‘our military advisers’ feel 
that the Nationalist military establishment has very likely already 
suffered too great losses in manpower, materiel and morale to make 
any such effort successful, that there is just no will to fight left in 
the Nationalist forces and that you can find no effective w T ay to change 
the situation. You further state that a moral resurgence of Chinese 
will to resist Communist aggression is required and that the requisite 
leadership just is not available. 

“The foregoing picture of the China situation and its possible de- 
velopments is generally borne out by some fifteen other Embassy 
reports between May and October. This appraisal is also borne out 
by other information reaching the Department, such as Tientsin’s 
report of October 14. 

“Recent Nationalist military reverses support the foregoing pic- 
ture. Tsingtao’s report of October 1 states that the majority of Gov- 
ernment troops at Tsinan did not want to fight, while those that did 
fight found their position made impossible by the disaffected, and that 
the Government forces at Tsinan had ample ammunition and food, 
and assurance of further supplies in the event of a protracted siege. 
Mukden’s report of October 19 gives a similar picture of the fall of 
Chinchow, stating that the early collapse of Chinchow’s defenses was 
caused by the defection of two divisions of the Government’s 93rd 



Army. The fall of Changchun was similarly aided by the defection 
of Government units. In each case the fall of the cities v T as reportedly 
accompanied by the loss of considerable quantities of military materiel 
through the defection and surrender of sizable numbers of Govern- 
ment troops. 

“Possibly pressing the Generalissimo for removal of incompetents 
does not appear promising in the light of his recent appointment, as 
you reported on October 19, of General Tu Li-ming to command in 
the Northeast in the face of repeated American advice against placing 
him in a responsible command. The reference to increased Jusmag 
[Joint United States Military Advisory Group in China] personnel, 
functions and authority after prior agreement by the Generalissimo 
on the acceptance and implementation of Jusmag advice as the price 
of stepped-up aid flies in the face of all previous experience of 
American advisers in China. You will recall the decisions regard- 
ing United States military advisers reached in my meeting with Sec- 
retary Royall, Undersecretary Draper, General Bradley, General 
Wedemeyer and others on June 11, when it was agreed that United 
States military advisers should not be placed with Chinese units in 
operational areas. 

“With reference to shipments of arms and ammunition as quickly as 
possible, the United States National Military Establishment is making 
every effort to speed delivery of military materiel being purchased 
from the $125,000,000 grants. The Department of the Army states 
informally that the loading of nearly all the ammunition covered by 
the Chinese request for 37.8 million dollars of arms and ammunition 
is expected to be completed on the West Coast about mid-November 
and the shipment should reach China by early December. Every 
effort is being made to expedite the shipment of other materiel under 
this program. The National Military Establishment is also endeavor- 
ing to arrange shipment of all arms and ammunition which Scap can 
advance and delivery of this materiel is expected to be made during 
November. Authorization for the disbursement of the $103,000 ; 000 
requested by the Chinese Government from the $125,000,000 grants 
has been transmitted by the Department to the Treasury Department 
and the latter has paid to the Chinese Government, or to the United 
States Departments of the Army, Navy and Air Force, as directed by 
the Chinese, $97,000,000 of this total, the balance of $6,000,000 to be 
paid October 25. You will realize no means exist to extend military 
aid to China other than United States assistance to the Chinese Gov- 
ernment under the $125,000,000 grants. 

“In summary, adoption of a course of increased aid would violate 
all basic considerations underlying American policy toward China, 



would involve the United States directly in China’s civil war, would 
commit this Government to underwriting the Chinese Government 
militarily and economically at a cost which it would be impossible 
to estimate at a time when the United States has heavy commitments 
throughout the world in connection with foreign aid programs and 
would not, in the light of appraisals of the situation submitted by the 
Embassy and consular offices in China over a period of several months, 
achieve its avowed objectives.” 

In another inquiry on October 23, the Ambassador suggested a num- 
ber of possible alternatives and requested instructions : 

“(A) Will we continue to recognize and support the Nationalist 
Government should they be forced to move elsewhere in China because 
of continuing military reverses ? 

“ (B) Would we advise the retirement of the Generalissimo in favor 
of Li Tsung-jen or some other national political leader with better 
prospects of forming a republican non-Communist government and 
of more effectively prosecuting the war against the Communist rebels? 

“(C) Would we approve the retirement of the Generalissimo in 
favor of some Chinese leader who could bring an end to the civil war 
on the best possible terms for the Nationalist forces and the non-Com- 
munist political parties ? 

“(D) In the latter course would we recognize and support a coali- 
tion government resulting from termination of hostilities and in- 
volving cooperation with the Communists for a united China? or, 

“(E) Would we give de facto recognition to such governments, the 
while withholding any Eca or other support? 

“I appreciate the difficulties which these seemingly hypothetical 
questions pose for you and your advisers. However in the acute crisis 
which I foresee for the Generalissimo and his government I feel that 
I must have the benefit of your most recent thinking on the above 
specific points or in more general terms if you prefer in order ade- 
quately to represent the views of the United States in this critical 
phase of our relations with China.” 

To this, the Secretary replied as follows : 

“With respect to the hypothetical questions raised by you on October 
23, the United States Government cannot place itself in a position 
of advising the retirement of the Generalissimo or the appointment 
of any other Chinese as head of the Chinese Government. To offer 
such advice is to accept responsibility for developments arising from 
the acceptance thereof and inferentially to commit the United States 
Government to support the succeeding regime regardless of United 
States interests. The difficulty *of our position in the event the Gen- 



eralissimo and his Government raise such questions is appreciated but 
it is not in the national interest to vouchsafe cut and dried answers 
to these oversimplified questions. . . . What can be said in answer 

to your questions is that the United States Government will cer- 
tainly continue to support the National Government as long as it 
remains an important factor on the Chinese scene. What course 
we would adopt should it move from Nanking, collapse, disappear or 
merge in a coalition with the Communists would have to be decided 
at the time in the light of United States interests and the then existing 

“As stated in my instruction of August 13, it is not likely that the 
situation will make it possible for us at this juncture to formulate 
any rigid plans for our future policy in China. Developments in 
China are obviously entering into a period of extreme flux and con- 
fusion in which it will be impossible with surety to perceive clearly 
far in advance the pattern of things to come and in which this Gov- 
ernment plainly must preserve maximum freedom of action.” 

In the development of his thinking on the problem facing the 
United States, the Ambassador on October 28 observed to the Depart- 
ment that : 

“What we really object to in Communism is not its admittedly so- 
cialized reforms but its intolerance, its insidious reliance on fifth 
column and similar secretive methods, its ruthless suppression of all 
thought or action that does not conform, its denial of individual 
human rights, its unscrupulous reliance on lying propaganda and any 
other immoral means to attain its ends, its fanatical dogmatism in- 
cluding its belief in the necessity for violent revolution. All these 
evils plus the fact that policy is directed from Moscow, apply to 
Chinese Communism as truly as elsewhere. Our problem is how to 
retard or expose or neutralize their influence in China. 

“Evil in Communism is moral or political rather than military. 
Predominance of the latter aspect in China is largely a historical 
accident. Even if we had been able to assist the Chiang Government 
by military means to clear an area of militant communism — which 
is all we could have hoped to do at best— we would still have been 
obliged to assist in educational and other processes by which the non- 
Communist section would be able to demonstrate superiority of genu- 
ine democracy. Otherwise, military gains would have proved self- 


During November, at the Paris session of the General Assembly of 
the United Nations, Dr. T. F. Tsiang, then head of the Chinese Dele- 



gation, approached Secretary of State Marshall on behalf of the 
Chinese Foreign Minister to inquire regarding the possibility of the 
appointment of American Army officers to actual command of Chinese 
Army units under the guise of advisers and the appointment of an 
officer of high rank to head a special mission. In the reply given to 
this request attention was called to the inherent difficulties involved 
in an attempt on the part of a newly appointed foreign official to 
advise the Chinese Government regarding its courses of action even 
if such an official were completely conversant with all the numerous 
difficulties of the situation and the even greater difficulties for a for- 
eign official not familiar with China. Dr. Tsiang also inquired as to 
the possibility of expediting the deliveries of military materiel, and 
was assured that all possible was being and would be done. In reply 
to his inquiry regarding the desirability of an appeal to the United 
Nations, he was informed that this was a matter for decision by the 
Chinese themselves. 48 

The Generalissimo then addressed a letter to President Truman, 49 
in which he asked for increased aid on the grounds that China was in 
danger of being lost to the cause of democracy. He said that the most 
fundamental factor in the general deterioration of the military situa- 
tion was the nonobservance by the Soviet Union of the Sino-Soviet 
Treaty of Friendship and Alliance, which, “as Your Excellency will 
doubtless recall, the Chinese Government signed as a result of well- 
intentioned advice from the United States.” He also asked for a high- 
ranking military officer as adviser, and a firm statement of American 
policy in support of the cause for which his Government was fighting. 

The reply of the President was delivered on November 13. 60 It 
stated that all possible was being done to expedite the shipment of 
supplies and repeated what Secretary Marshall had told Dr. Tsiang 
regarding an adviser. The President called attention, however, to 
the fact that Major General Barr, Director of the Joint United States 
Military Advisory Group in China, was conversant with the current 
situation and that his advice had always been available to the General- 
issimo. The President adverted to his statement of March 11, 1948, 
which, he said, made the position of the United States abundantly 
clear. He concluded that it was with the hope of supporting the cause 
of peace and democracy throughout the world that the United States 
had extended assistance to the Chinese Government and that the 
United States Government would continue to exert every effort to 
expedite the implementation of the program of aid for China. 

48 See annex 162 (a) and (b). 

49 See annex 163. 

60 See annex 164. 



The estimate of the military situation furnished the Department by 
the Embassy at Nanking on November 6 made it impossible to expect 
that the appointment of a high-ranking United States military officer 
could cause any change in the situation : 

“We gathered together senior military personnel Jusmag and Serv- 
ice Attaches, who, after discussing military situation, were unanimous 
that short of actual employment of United States troops no amount 
of military assistance could save the present situation in view of its 
advanced stage of deterioration. Agreeing that employment of 
United States troops was impossible, it was the conclusion of the group 
that there w T as no military step China or the United States could take 
in sufficient time to retrieve the military situation.” 

From then until the end of the year high officials of the Chinese 
Government approached the Ambassador in varying degrees of pessi- 
mism, asking his advice and assistance. To all such approaches he 
expressed assurances of continuing American sympathy but made it 
clear that the American Government could not assume responsibility 
for decisions which properly lay with the Chinese Government. 51 

It was against this background that a new cabinet was formed in 
December 1948 with Dr. Sun Fo as the new President of the Executive 
Yuan or Prime Minister. 52 



At the beginning of the year there were rumors that the General- 
issimo would withdraw from the presidency and turn over control 
to the Vice President, General Li Tsung-jen. Rumors of his with- 
drawal were strengthened by his New Year’s message to the nation 63 
in which he indicated that the National Government would be willing 
to enter into peace negotiations with the Chinese Communists and that, 
if peace could be secured, he would not be concerned about his own 

The Ambassador on January 3 commented as follows on this New 
Year’s message: 

“My first reaction was favorable. It was dignified and conciliatory. 
There was less abuse of the Communists than usual. In assuming 

61 See annexes 165 (a)-(h). 

62 See annex 166 for a series of chronicle round-up reports written by the Em- 
bassy in Nanking during 1948. These informal reports give a summary account 
of the over-all situation during the year. 

63 See annex 167. 



blame for the national distress the Generalissimo was in the best tradi- 
tion and in indicating his readiness either to continue or retire he was 
in accord with new democratic concepts. 

“But on further thought the fatal flaws reveal themselves. It was 
too much a literary composition in the grand manner. It has the 
gracious tone of a powerful ruler dealing with troublesome rebels. In 
this it ignored unpleasant realities: the virtual collapse of military 
capacity, the failure of the latest monetary measures, the almost uni- 
versal desire for peace and the impossibility of it as long as he stays 
in office. 

“The other flaw was more serious. In a sense he has made conces- 
sions but in doing so has not gone far enough. His stubborn pride, 
his anger over the Communist war criminal list which he heads, the 
influence of . . . irreconcilables led him to retract his forthright 
decision made earlier in the week to resign and leave the Vice Presi- 
dent free to adopt any policy that might seem to him to be for na- 
tional welfare. Yet the pressure was too strong and his original 
intention too definite for him to avoid any reference to his own will- 
ingness to retire. This will destroy what ever is left of will to fight 
among his troops. There was at once division of opinion among mili- 
tary officers. The position taken seems to be the result of compromise 
among the various groups in the Kuomintang. Each of the Gener- 
alissimo’s five conditions may be taken to represent emphasis of one 
of these factions. In attempting to reconcile them all he may further 
intensify internal disagreements. Communist reaction can be easily 
surmised. Their attitude will doubtless be uncompromising. Flushed 
with success and with victory in sight they want to complete the task 
of eradicating once and for all the evil influence of the Kuomintang, 
precisely as Chen Li-fu and his supporters have consistently argued 
regarding the Communists. Whether by this the Communists mean 
only the present leadership and structural organization of the Kuo- 
mintang can only be learned from their future behavior. But it will 
seem that the Kuomintang at any rate must succumb to the dynamic 
purpose of the Communists and because of its own shortcomings. 
Once the Communists have eliminated this source of opposition they 
might propose some inclusive form of coalition and attempt a politi- 
cal settlement with political resistance groups in the outlying 

“In any event a movement was started on New Year’s day which 
would seem to be the beginning of the end of military conflict on a 
national scale.” 




On New Year’s Day also Dr. Sun Fo, the Prime Minister, broad- 
cast a message to the Chinese people repeating the Generalissimo’s 
statement regarding the desire of the Chinese Government for peace. 
Of some interest was his reference to the period of peace negotiations 
in 1946 : 

“You will recall that, shortly after Y-J Day, a political consultative 
conference was called, which was attended by representatives of all 
political parties and leading independents. The Government decided 
to call this conference because it was generally realized that the coun- 
try and the people needed recuperation and peace so that rehabilita- 
tion work could be started. After three weeks of concerted efforts, 
and thanks to the good offices of General George Marshall as Presi- 
dent Truman’s Special Envoy to China, a program for the settle- 
ment of all disputes was worked out. 

“Had these measures been carried out at that time, all of us would 
have seen more prosperity and happiness in our midst. Unfortu- 
nately, all the parties concerned could not completely abandon their 
own selfish ends, and the people in general did not exert sufficient 
influence in promoting this peace movement.” 


On January 8, 1949, the Chinese Foreign Minister requested the 
American, British, French and Soviet Governments to act as inter- 
mediaries in the initiation of negotiations with the Chinese Commu- 
nist Party with a view to obtaining a restoration of peace. 54 

On January 12 the United States replied to the Chinese request 
in the following aide-memoire: 

“The United States Government has received and has given careful 
consideration to the aide-memoire delivered by the Chinese Minister 
for Foreign Affairs to the United States Ambassador at Nanking on 

January 8, 1949. . 

“It is noted in the aide-memoire that the Chinese Government is 
most anxious that the internal situation in China should not in any 
way become an impediment to the progress of world peace. It is also 
noted that the Chinese Government took steps immediately following 
the Japanese surrender to initiate and carry on peace negotiations with 
the Chinese Communist Party. 

“It will be recalled that these negotiations in September and October 
1945 resulted in agreement for the convening of a Political Consulta- 
tive Conference, to be composed of representatives of all political 

M For text of aide-memoire of Jan. 8, 1949, see annex 168. 



parties as well as non-party Chinese leaders, for the purpose of form- 
ing a constitutional government in which all Chinese parties and 
groups would be represented. It will also be recalled that subsequent 
to these negotiations clashes between the armed forces of the Chinese 
Government and of the Chinese Communist Party became increasingly 
widespread. It was at this juncture in December 1945 that the United 
States Government, motivated by the same anxiety as that expressed 
in the Chinese Government’s aide-memoire under acknowledgment 
with respect to the danger to world peace from the internal situation 
in China and desirous of doing everything within its power to assist in 
bringing peace to China, offered its good offices in the hope that a peace- 
ful settlement of their differences could be achieved by the Chinese 
themselves along the lines of the agreement reached in September and 
October. In furtherance of that Chinese agreement and with the con- 
sent of the Chinese Government and the Chinese Communist Party, 
General Marshall shortly after his arrival in China on December 21, 
exerted his good offices in assisting the Chinese Government and the 
Chinese Communist Party to reach an agreement for a cessation of 
hostilities with the hope that discussions by the Chinese of their differ- 
ences could be conducted in an atmosphere of peace. 

“Following the convening of the Political Consultative Conference 
and its approval of resolutions providing for the settlement of political 
differences and the establishment of a constitutional government to 
include all parties and groups in China, General Marshall again ex- 
erted his good offices in connection with the agreement reached for 
the reorganization of all Chinese armed forces and their amalgama- 
tion into a national army responsible to a civilian government. 

“The negotiations between the Chinese Government and the Chinese 
Communist Party subsequently broke down and the various agree- 
ments were not implemented. The United States Government, there- 
fore, after having made every effort to assist the Chinese in bringing 
peace to China through implementation of the fundamental political 
agreements arising out of the Chinese Government’s negotiations with 
the Chinese Communist Party immediately after the Japanese sur- 
render, considered that it had no alternative to withdrawal from its 
position as an intermediary. 

“In the light of the foregoing, it is not believed that any useful 
purpose would be served by the United States Government’s attempt- 
ing, in accordance with the Chinese Government’s suggestion, to act 
as an intermediary in the present situation.” 

The Ambassador was instructed that if he were asked any questions 
he should limit his reply to the confines set by the President’s message 
to Congress of February 18, 1948, and the statement by the Secretary 



of State to the House Foreign Affairs Committee on February 20. 55 
He was also to assure the F oreign Minister of the sympathetic interest 
and genuine friendship of the American people for the people of 
China. On the same day, the Chinese Ambassador in Washington 
called on the Acting Secretary of State to ascertain if, in the event 
the Chinese request were refused, the United States would consider 
issuing a statement indicating that the Chinese Government sincerely 
desired a peaceful settlement. He was informed that such action 
would be inappropriate. France, Great Britain and the Soviet Union 
also refused the Chinese request for mediation. 


By the end of 1948 the Chinese Communist forces were in strength 
in the Pengpu area north of Nanking and the best of the Nationalist 
forces had been withdrawn through Nanking south of the Yangtze 
Biver. The grave military position of the National Government was 
reflected in the estimate submitted in December by General Barr, 
Director of the Jusmag in China, that only a policy of unlimited 
United States aid, including the immediate employment of the United 
States armed forces, which he said he did not recommend, would 
enable the National Government to maintain a foothold in South 
China against a determined Chinese Communist advance. By the 
latter part of January the Chinese Communist forces had moved to 
the north bank of the Yangtze in the Nanking-Shanghai area and 
were in position to attempt a crossing of the river. 

On January 21 the Generalissimo issued a statement announcing 
his decision to retire and left Nanking for Fenghua, his birthplace. 
He declared: 

“With the hope that the hostilities may be brought to an end and 
the people’s sufferings relieved, I have decided to retire. As from 
January 21st, Vice-President Li Tsung-jen will exercise the duties 
and powers of the President in accordance with Article 49 of the con- 
stitution which provides that ‘in the event the President is for any 
reason unable to perform his functions, his duties and powers shall 
be exercised by the Vice President.’ ” 

The Generalissimo’s action was, in effect, recognition of the over- 
whelming desire of the Chinese people for peace. As he stated: 
“Since I issued my New Year message urging the restoration of peace, 
the entire nation with one accord has echoed its unreserved support.” 

On January 24, 1949, the Chinese Ambassador at Washington offi- 

60 See pp. 379-380. 


cially notified the Department of State of the Generalissimo’s decision 
and of the assumption of office by Vice President Li Tsung-jen. 


On January 23 a representative of the Acting President called on 
Ambassador Stuart to request a public statement of support from the 
United States. This representative said that General Li had been in 
touch with the Soviet Embassy and had worked out a tentative three- 
point draft agreement between China and the Soviet Union which the 
Soviet Ambassador had taken with him to Moscow a few days earlier. 
The three points were: (1) strict Chinese neutrality in any future 
international conflict; (2) the elimination of American influence to as 
great an extent as possible in China; (3) the establishment of a basis 
of real cooperation between China and Russia. General Li had agreed 
to these three points in principle and felt that his hand would be 
strengthened in negotiating on them if he had a statement of Ameri- 
can support. The Department at once replied that it considered it 
“incredible that Li Tsung-jen should seek a United States statement 
indicating support for the purpose of strengthening his position while 
at the same time arranging a tentative agreement with Russia calling 
for elimination of American influence from China.” The Ambassador 
was instructed to make these views known to General Li. 

In the meantime, the Acting President had directed General Chang 
Chun, General Chang Chih-chung and Mr. Chen Li-fu to seek a direct 
approach to the Chinese Communist Party. The Acting President 
also summoned an unofficial peace mission to fly to Peiping to arrange 
for the subsequent reception of an official peace mission. With his en- 
couragement an unofficial Shanghai peace delegation proceeded to 
Peiping to discuss peace arrangements with the Chinese Communists. 
The Chinese Communist Party continued to hold to its publicly an- 
nounced eight-point peace terms as the basis of a settlement : 

1. Strict punishment of war criminals. 

2. Abolition of the constitution. 

3. Abolition of the Kuomintang legal system. 

4. Reorganization of Nationalist troops according to democratic 

5. Confiscation of “bureaucratic” capital. 

6. Reformation of the land system. 

7. Abolition of “treasonous treaties.” 

8. Convocation of a Political Consultative Conference with non- 
participation of “reactionary elements,” establishment of demo- 
cratic coalition government, taking over all authority of the 
“Kuomintang reactionary government” and all its strata. 



These terms were equivalent to unconditional surrender, but the 
Government’s condition was so serious that it felt compelled to make 
an effort toward negotiation with a view to obtaining modification. 

On February 5, pursuant to a decision of the Executive Yuan,